Rule 10b5-1 Trading Plan Of Dean Garfinkel
2009-2010
Rule
10b5-1 Trading Plan
Of
Xxxx
Xxxxxxxxx
This Rule 10b5-1 Trading Plan of Xxxx
Xxxxxxxxx (this “Trading Plan”), dated as of September 9, 2009, is by and
between Xxxx Xxxxxxxxx
(“Seller”) and Spartan Securities Group, Ltd. (“Broker”).
WHEREAS, Seller desires to
establish this Trading Plan in order to facilitate the sale of up to 4.5 million
shares (each, a “Share”) of the common stock, par value $0.001 per share (the
“Common Stock”), of Compliance Systems Corporation (the “Issuer”) and desires to
engage Broker to effectuate the sale of the Shares in accordance with this
Trading Plan;
WHEREAS, Seller desires to
advise the Issuer of Seller’s intent to engage in the transactions contemplated
in this Trading Plan and to confirm and acknowledge that Seller intends for the
transactions contemplated by this Trading Plan to comply with Rule 10b5-1
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
NOW, THEREFORE, in
consideration of the foregoing and of the respective covenants and agreements of
the parties herein contained, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties agree as set
forth below.
1. Trading
Instructions. Seller hereby authorizes and directs Broker to
effect one or more sales (each, a “Sale”) of up to 1,750,000 Shares on September
1, 2009 and, thereafter, 250,000 Shares on the first day (or as soon thereafter
as such Sales can be accomplished in accordance with the terms and provisions of
this Trading Plan) of each succeeding calendar month in which the Common Stock
is quoted on the OTC Bulletin Board Market (“OTC BB”) at a price of not less
than $0.05 per Share (before brokerage commissions or other transaction fees and
costs). The total number of Shares that Broker is authorized and
directed to sell in any calendar month is limited to 1,750,000 Shares with
respect to September 2009 and 250,000 Shares with respect to all other calendar
months. Notwithstanding the immediately preceding sentence, in the
event that any of the Shares that are authorized and directed to be sold in a
calendar month under this Trading Plan are not sold in such calendar month, the
subject remaining Shares are authorized and directed to be sold in the next
succeeding calendar months until all of such Shares are sold; provided, however, that no
Shares may be sold pursuant to this Trading Plan following the Termination Date
(as such capitalized term is defined in section 2 of this Trading
Plan).
2. Effective and Termination
Dates. This Trading Plan shall become effective on September
1, 2009 and shall terminate on such date (the “Termination Date”) upon the first
to occur of the following:
(a) the
earlier of (i) August 31, 2010, or (ii) such time as the aggregate number of
Shares sold pursuant to this Trading Plan equals the total number of Shares
authorized, for sale pursuant to this Trading Plan (i.e., 4.5 million
Shares);
(b) the
death of Seller;
(c) if,
at any time, any sale contemplated by this Trading Plan shall result in a
violation or adverse consequence under the applicable federal and state
securities laws (including, but not limited to, a shortswing liability pursuant
to Section 16 of the Exchange Act); or
(d) if
the Issuer completes an underwritten offering of its securities pursuant to the
Securities Act of 1933, as amended (the “Securities Act”), and the Issuer
requests that Seller discontinue the sales of Shares as contemplated by this
Trading Plan.
3. Modifications. Subject
to the provisions of section 7 of this Trading Plan, this Trading Plan may be
amended or otherwise modified by Seller, provided that such amendment or other
modification is in writing, made in good faith and not as part of a plan or
scheme to evade prohibitions of Rule 10b-5 promulgated under the Exchange Act
and is approved by the Issuer’s designated legal officer or other senior
executive officer (other than Seller).
4. Market Disruption or Other
Disruption. The Seller hereby acknowledges that Broker may not
be able to affect a Sale due to a market disruption or a legal, regulatory or
contractual restriction applicable to Broker or to the relevant
market. If any sale of Shares cannot be executed as required by
section 1 of this Trading Plan due to a market disruption, a legal, regulatory
or contractual restriction applicable to Broker or any other event, Broker shall
effect such sale of Shares as promptly as practical after the cessation or
termination of such market disruption, applicable restriction or other event,
provided that the sale of Shares complies with the directions and authorizations
provided in section 1 of this Trading Plan.
5. Seller Representations and
Warranties. Seller hereby represents and warrants to Broker
and Issuer that, as of the date of this Trading Plan (and the date of actual
execution by Seller, if such execution date is different from the date of this
Trading Plan):
(a) Seller is not in possession of any
material nonpublic information with respect to the Issuer or any securities of
the Issuer (including, including, but not limited to, the Shares and Common
Stock) and is entering into this Trading Plan in good faith and not as part of a
plan or scheme to evade the prohibitions of Rule 10b5-1 promulgated under the
Exchange Act; and
(b) Seller currently is able to sell
shares of Common Stock, including the Shares, in accordance with the Issuer’s
xxxxxxx xxxxxxx policies and Seller has obtained the written approval of Issuer
to enter into this Trading Plan.
6. Compliance with the Securities
Laws. Broker and Seller hereby each acknowledge that it is the
intent of the parties that this Trading Plan comply with the requirements of
Rule 10b5-1(c)(1)(i)(B) promulgated under the Exchange Act and this Trading Plan
shall be interpreted to comply with the requirements of Rule 10b5-1(c)
promulgated under the Exchange Act. Accordingly,
(a) Broker covenants to conduct all
sales of Shares in accordance with the manner of sale requirements of Rule 144
promulgated under the Securities Act, and in no event shall Broker effect any
sale if such sale would exceed the then applicable volume limitation under Rule
144, assuming the sale of Shares are the only sales by Seller of Common Stock
subject to such volume limitation, and
(b) Seller covenants (i) not to take,
and covenants to cause any person or entity with which Seller would be required
to aggregate sales of Common Stock pursuant to paragraphs (a) and/or (e) of Rule
144 not to take, any action that would cause sales of any of the Shares not to
comply with Rule 144 and (ii) to make all filings, if any, required under
Sections 13(d) and 16 of the Exchange Act in connection with each sale of any of
the Shares.
7. Entire Agreement. This Trading Plan
constitutes the entire agreement between the parties and supersedes all prior
agreements between the parties with respect to the subject matter of this
Trading Plan. In addition to the requirements of section 3 of this
Trading Plan, no amendment, modification, termination or waiver of any provision
of this Trading Plan shall be effective unless the same shall be in writing and
signed by the parties and Issuer, and then such waiver or consent shall be
effective only with respect to the specific purpose for which
given.
8. Notices. All
requests, demands, notices and other communications required or otherwise given
under this Agreement shall be deemed sufficiently given if (a) delivered by
hand, against written receipt therefor, (b) forwarded via a nationally
recognized overnight courier requiring delivery the next business day and
written acknowledgment of receipt or (c) mailed by postage prepaid, registered
or certified mail, return receipt requested, in any event, addressed as
follows:
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If
to Seller, to:
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Xxxx
Xxxxxxxxx
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c/o
Compliance Systems Corporation
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90
Xxxxx Oval
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Glen
Cove, New York 11542
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with
a required copy to the Issuer at the following address:
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Xxxxx
Xxxxxxxxxx, Chief Financial Officer
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Compliance
Systems Corporation
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90
Xxxxx Oval
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Glen
Cove, New York 11542
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If
to Broker, to:
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Xxxx
Xxxxxx, Managing Partner
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Spartan
Securities Group, Ltd.
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000
Xxxxxx Xxxxxx Xxxxx - Xxxxx 000X
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St.
Petersburg, Florida 33701
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or, in
the case of any of the parties to this Trading Plan, at such other address as
such party shall have furnished in writing, in accordance with this section 8,
to the other party to this Trading Plan. Each such request, demand,
notice or other communication shall be deemed given (i) on the date of delivery
by hand, (ii) on the first business day following the date of delivery to an
overnight courier or (iii) three business days following mailing by registered
or certified mail.
9. Counterparts. This
Trading Plan may be executed in any number of counterparts and by different
parties to this Trading Plan in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
10. Successors and
Assigns. This Trading Plan shall, upon execution and delivery
by the parties, become effective and shall be binding upon and inure to the
benefit of Seller and Xxxxxx and Xxxxxx’s heirs, legatees, representatives,
successors and assigns, except that Seller may not transfer or assign any of
Seller’s rights or interests or assign, delegate or cause any person to assume
Seller’s obligations or duties under this Trading Plan without the prior written
consent of the Issuer, which consent may be granted or withheld in the sole
discretion of the Issuer.
11.
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
THIS TRADING PLAN SHALL BE CONSTRUED
IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK. SELLER AND BROKER HEREBY IRREVOCABLY SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR STATE COURT HAVING JURISDICTION OVER
NASSAU COUNTY, NEW YORK IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, OR
RELATING TO, THIS TRADING PLAN OR ANY TRANSACTION CONTEMPLATED BY THIS TRADING
PLAN AND SELLER AND
BROKER HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION, SUIT, OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION EACH
MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
ACTION, SUIT, OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH
COURT IS AN INCONVENIENT FORUM. SELLER AND BROKER HEREBY WAIVE TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS TRADING PLAN OR THE RELATIONSHIP
ESTABLISHED UNDER THIS TRADING PLAN.
12. Severability. Any
provision of this Trading Plan which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Trading Plan or affecting the validity or enforceability of
such provision in any other jurisdiction; wherever possible, each provision of
this Trading Plan shall be interpreted in such manner as to be effective and
valid under applicable law.
13. Third Party Beneficiary. The
Broker and Seller hereby each acknowledge that the Issuer is a third party
beneficiary of this Trading Plan.
14. Power-of-Attorney. Seller
hereby irrevocably appoints Xxxxxxx Xxxxxxx as Seller’s attorney- in-fact solely
with respect to executing, acknowledging and delivering, in Seller’s name, place
and stead, such documents as may be necessary to effectuate sales of the Shares
pursuant to Rule 144 in accordance with this Agreement, including, but not
limited to, executing stock powers, sell orders and seller representation
letters in connection with such sales.
IN WITNESS WHEREOF, the
undersigned have caused this Trading Plan to be executed as of the day and year
first above written.
| SELLER: | |||
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/s/
Xxxx Xxxxxxxxx
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Xxxx
Xxxxxxxxx
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| BROKER: | |||
| Spartan Securities Group, Ltd. | |||
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By:
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/s/ Xxxx
Xxxxx
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Xxxx
Xxxxx, Managing Director
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| ISSUER: | |||||
| Acknowledged, as of September 1, 2009: | |||||
| Compliance Systems Corporation | |||||
| By: |
/s/ Xxxxx
Xxxxxxxxxx
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Xxxxx
Xxxxxxxxxx, Chief Financial Officer
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