STRIKEFORCE TECHNOLOGIES, INC. UNIT PURCHASE AGREEMENT
STRIKEFORCE
TECHNOLOGIES, INC.
This
Unit
Purchase Agreement (“Agreement”)
is
made as of July __, 2006, by and between StrikeForce Technologies, Inc., a
New
Jersey corporation (the “Company”),
and
the purchasers who execute the Purchaser Signature Page hereto (the
“Purchaser”).
R E C I T A L S
A. The
Company desires to obtain funds from each Purchaser in order provide working
capital, to and further the operations of the Company.
B. In
order
to obtain such funds, the Company is offering up to six (6) units (the
“Units”),
each
Unit consisting of (i) a twelve percent (12%) redeemable promissory note of
the
Company in the principal amount of Twenty Five Thousand Dollars ($25,000) (each
a “Note,”
and
collectively, the “Notes”),
a
form of which is annexed hereto as Exhibit
A,
and
(ii) 250,000 shares (the “Shares”)
of
common stock, $0.0001 per share par value (the “Common
Stock”,
on the
terms and subject to the conditions set forth herein. The Notes and the Shares
are collectively referred to herein as the “Securities”.
The
Shares are provided certain demand registration rights as set forth in the
Registration Rights Agreement (the “Registration
Rights Agreement”)
in the
form annexed hereto as Exhibit
B.
AGREEMENT
It
is
agreed as follows:
1. PURCHASE
AND SALE OF UNITS.
1.1 Purchase
and Sale.
In
reliance upon the representations and warranties of the Company and each
Purchaser contained herein and subject to the terms and conditions set forth
herein, at Closing, each Purchaser shall purchase, and the Company shall sell
and issue to each Purchaser, the number of Units set forth on the signature
page
annexed to the end of this Agreement (the “Purchaser
Signature Page”)
bearing such Purchaser’s name at a purchase price of $25,000.00 per Unit (the
“Purchase
Price”).
The
Parties agree that the acquisition of the Notes and Shares shall be deemed
an
“investment” for purposes of the General Obligations law of the State of New
York. Additionally, the parties hereby agree and acknowledge that the amount
of
the Purchase Price attributable to the Shares shall be $.01 per share. The
Notes
shall be purchased at an original issue discount of 6%, which shall constitute
pre-paid interest for the first six months, such that for each Unit purchased,
after deduction of the prepaid interest on the Note in the amount of $1,500.00,
the net amount payable to the Company for each Unit shall be $23,500.00.
1.2 Notes.
At each
Closing, the Company will issue and deliver the Notes and Shares to the
Purchasers. The
Note
may not be repaid in whole or in part, prior to the maturity date thereof
without paying the entire principal amount loaned, plus a prepayment penalty
equal to the amount of original issue discount set forth in Section 1.1 above.
In the event that any of the Notes are unenforceable for any reason whatsoever,
or that the enforceability of such Notes is contested by the Company for any
reason, said Notes, and all interest thereon, shall become immediately
convertible, at the option of the Noteholders, into Common Stock of the Company
at a conversion price of $.085 per share.
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2. CLOSING(S).
2.1 Date
and Time.
The
sale
of Units will take place in one or more identical closings (each, a
“Closing”),
subject to the satisfaction of all the parties hereto of their obligations
herein. The Purchasers shall submit an executed copy of this Agreement to the
Placement Agent along with the Purchase Price. Once a minimum of at least
$50,000 of subscriptions acceptable to the Company have been provided, along
with funds therefore, the first Closing (the “First
Closing”)
of the
sale of Units contemplated by this Agreement shall take place. Thereafter,
the
Company may close upon subscriptions for Units from time to time in one or
more
Closings until the maximum amount of $150,000 of Units have been sold pursuant
to this Agreement. The Closings shall take place at the offices of the Company
or at such other place as the Company and the Placement Agent (as hereinafter
defined) and such Purchaser shall agree in writing, on or before July 14, 2006,
unless otherwise extended by the Company and Placement Agent (the “Final
Closing Date”).
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
As
a
material inducement to each Purchaser to enter into this Agreement and to
purchase the Units, the Company represents and warrants that the following
statements are true and correct in all material respects as of the date hereof
and will be true and correct in all material respects at Closing, except as
expressly qualified or modified herein.
3.1 Organization
and Good Standing.
The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of New Jersey and has full corporate power and
authority to enter into and perform its obligations under this Agreement, and
to
own its properties and to carry on its business as presently conducted and
as proposed
to be conducted.
3.2 Capitalization.
The
Company is authorized to issue 100,000,000 shares of Common Stock of which,
as
of June 30, 2006, 26,092,760 shares were issued and outstanding, and 10,000,000
shares of preferred stock, of which no shares are issued and outstanding. All
outstanding shares of the company’s capital stock have been duly authorized and
validly issued, and are fully paid, nonassessable, and free of any preemptive
rights.
3.3 Authorization.
The
Company has full power and authority and has taken all requisite action on
the
part of the Company, its officers, directors and stockholders necessary for
(i)
the authorization, execution and delivery of this Agreement, the Notes , the
Registration Rights Agreement and any other transaction documents relating
to
this Agreement (collectively the “Transaction
Documents”),
(ii)
the authorization of the performance of all obligations of the Company hereunder
or thereunder, and (iii) the authorization, issuance (or reservation for
issuance) and delivery of the Securities.
The
Transaction Documents constitute the legal, valid and binding obligations of
the
Company, enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and
similar laws of general applicability, relating to or affecting creditors’
rights generally.
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3.4 Valid
Issuance of Securities.
The
Securities have been duly and validly authorized and, upon issuance to Shares
,
will be validly issued, fully paid and nonassessable. The Securities, upon
issuance, are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, other than restrictions upon transfer under
federal and state securities laws.
3.5 No
Violation.
The
execution, delivery and performance of this Agreement has been duly authorized
by the Company’s Board of Directors and will not violate any law or any order of
any court or government agency applicable to the Company, as the case may be,
or
the Restated Certificate of Incorporation or Bylaws of the Company, and will
not
result in any breach of or default under, or, except as expressly provided
herein, result in the creation of any encumbrance upon any of the assets of
the
Company pursuant to the terms of any agreement or instrument by which the
Company or any of its assets may be bound. No approval of or filing with any
governmental authority is required for the Company to enter into, execute or
perform this Agreement or any Transaction Document.
3.6 No
Material Adverse Change.
Since
January 18, 2005, except as identified and described in the SEC Reports (as
defined below) or as described on Schedule
3.6,
there
has not been:
(i) any
change in the consolidated assets, liabilities, financial condition or operating
results of the Company from that reflected in the financial statements included
in the Company’s Quarterly Report on Form 10-QSB/A for the quarter ended March
31, 2006, except for changes in the ordinary course of business which have
not
had and could not reasonably be expected to have a material adverse effect
on
the Company’s assets, properties, financial condition, operating results or
business of the Company and its subsidiaries taken as a whole (as such business
is presently conducted and as it is proposed to be conducted) (a “Material
Adverse Effect”),
individually or in the aggregate;
(ii) any
declaration or payment of any dividend, or any authorization or payment of
any
distribution, on any of the capital stock of the Company, or any redemption
or
repurchase of any securities of the Company;
(iii) any
material damage, destruction or loss, whether or not covered by insurance,
to
any assets or properties of the Company or its subsidiaries;
(iv) any
waiver, not in the ordinary course of business, by the Company or any subsidiary
of a material right or of a material debt owed to it;
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(v) any
satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company or a subsidiary, except in the ordinary course of
business and which has not had a Material Adverse Effect;
(vi) any
change or amendment to the Company’s Articles of Incorporation or Bylaws, or
material change to any material contract or arrangement by which the Company
or
any subsidiary is bound or to which any of their respective assets or properties
is subject;
(vii) any
material labor difficulties or labor union organizing activities with respect
to
employees of the Company or any subsidiary;
(viii) any
material transaction entered into by the Company or a subsidiary other than
in
the ordinary course of business;
(ix) the
loss
of the services of any key employee, or material change in the composition
or
duties of the senior management of the Company or any subsidiary;
(x) the
loss
or threatened loss of any customer which has had or could reasonably be expected
to have a Material Adverse Effect; or
(xi) any
other
event or condition of any character that has had or could reasonably be expected
to have a Material Adverse Effect.
3.7 SEC
Reports and Financial Statements.
3.7.1 The
Company has delivered or made available to each Purchaser accurate and complete
copies (excluding copies of exhibits) of each report, registration statement,
and definitive proxy statement filed by the Company with the United States
Securities and Exchange Commission (“SEC”)
since
January 18, 2005 (collectively, with all information incorporated by reference
therein or deemed to be incorporated by reference therein, the “SEC
Reports”). All
statements, reports, schedules, forms and other documents required to have
been
filed by the Company with the SEC have been so filed. As of the time it was
filed with the SEC (or, if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing): (i) each of the SEC Reports
complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as
amended; and (ii) none of the SEC Reports contained any untrue statement of
a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3.7.2 Except
for the pro forma financial statements, the consolidated financial statements
contained in the SEC Reports: (i) complied as to form in all material respects
with the published rules and regulations of the SEC applicable thereto; (ii)
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered (except as may be indicated in the notes to such financial
statements and, in the case of unaudited statements,
as permitted by Form 10-QSB of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to normal and recurring
year-end audit adjustments which will not, individually or in the aggregate,
be
material in amount); and (iii) fairly present, in all material respects, the
consolidated financial position of the Company and its consolidated subsidiaries
as of the respective dates thereof and the consolidated results of operations
of
the Company and its consolidated subsidiaries for the periods covered thereby.
All adjustments considered necessary for a fair presentation of the financial
statements have been included.
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3.8 Securities
Law Compliance.
Without
consideration of the actions of the Placement Agent (as defined in Section
8
herein), and assuming the accuracy of the representations and warranties of
each
Purchaser set forth in Section 4 of this Agreement, the offer, issue, sale
and
delivery of the Units will constitute an exempted transaction under the
Securities Act of 1933, as amended and now in effect (the “Securities
Act”),
and
registration of the Units under the Securities Act is not required. The Company
shall make such filings as may be necessary to comply with the Federal
securities laws and the “blue sky” laws of any state, which filings will be made
in a timely manner.
3.9 No
Conflict, Breach, Violation or Default.
Except
as set forth on Schedule
3.9,
the
execution, delivery and performance of the Transaction Documents by the Company
and the issuance and sale of the Securities will not conflict with or result
in
a breach or violation of any of the terms and provisions of, or constitute
a
default under (i) the Company’s Restated Certificate of Incorporation or the
Company’s Bylaws, both as in effect on the date hereof (true and complete copies
of which have been made available to the Purchasers through the ▇▇▇▇▇ system),
or (ii) any statute, rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the Company,
any subsidiary or any of their respective assets or properties, or (b) any
material agreement or instrument to which the Company or any subsidiary is
a
party or by which the Company or a subsidiary is bound or to which any of their
respective assets or properties is subject.
3.10 Tax
Matters.
Except
as set forth on Schedule
3.10,
the
Company and each subsidiary has timely prepared and filed all tax returns
required to have been filed by the Company with all appropriate governmental
agencies and timely paid all taxes shown thereon or otherwise owed by it. The
charges, accruals and reserves on the books of the Company in respect of taxes
for all fiscal periods are adequate in all material respects, and there are
no
material unpaid assessments against the Company nor, to the Company’s Knowledge,
any basis for the assessment of any additional taxes, penalties or interest
for
any fiscal period or audits by any federal, state or local taxing authority
except for any assessment which is not material to the Company, taken as a
whole. All taxes and other assessments and levies that the Company is required
to withhold or to collect for payment have been duly withheld and collected
and
paid to the proper governmental entity or third party when due. There are no
tax
liens or claims pending or, to the Company’s Knowledge, threatened against the
Company or any subsidiary or any of their respective assets or property. Except
as described on Schedule
3.10,
there
are no outstanding tax sharing agreements or other such arrangements between
the
Company or other corporation or entity. For the purposes of this agreement,
“Company’s
Knowledge”
means
the actual
knowledge of the executive officers (as defined in Rule 405 under the Securities
Act) of the Company, after due inquiry.
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3.11 Title
to Properties. Except
as
disclosed in the SEC Reports, the Company has good and marketable title to
all
real properties and all other properties and assets owned by it, in each case
free from liens, encumbrances and defects that would materially affect the
value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Reports, the Company
holds any leased real or personal property under valid and enforceable leases
with no exceptions that would materially interfere with the use made or
currently planned to be made thereof by them.
3.12 Intellectual
Property.
(a) All
Intellectual Property of the Company is currently in compliance with all legal
requirements (including timely filings, proofs and payments of fees) and is
valid and enforceable. No Intellectual Property of the Company which is
necessary for the conduct of Company’s and each of its subsidiaries’ respective
businesses as currently conducted or as currently proposed to be conducted
has
been or is now involved in any cancellation, dispute or litigation, and, to
the
Company’s Knowledge, no such action is threatened. No patent of the Company has
been or is now involved in any interference, reissue, re-examination or
opposition proceeding.
(b) All
of
the licenses and sublicenses and consent, royalty or other agreements concerning
Intellectual Property which are necessary for the conduct of the Company’s
business as currently conducted or as currently proposed to be conducted to
which the Company or any subsidiary is a party or by which any of their assets
are bound (other than generally commercially available, non-custom,
off-the-shelf software application programs having a retail acquisition price
of
less than $10,000 per license) (collectively, “License
Agreements”)
are
valid and binding obligations of the Company and, to the Company’s Knowledge,
the other parties thereto, enforceable in accordance with their terms, except
to
the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the enforcement of creditors’ rights generally, and there exists no
event or condition which will result in a material violation or breach of or
constitute (with or without due notice or lapse of time or both) a default
by
the Company under any such License Agreement.
(c) The
Company own or have the valid right to use all of the Intellectual Property
that
is necessary for the conduct of the Company’s and each of its subsidiaries’
respective businesses as currently conducted or as currently proposed to be
conducted and for the ownership, maintenance and operation of the Company’s and
its subsidiaries’ properties and assets, free and clear of all liens,
encumbrances, adverse claims or obligations to license all such owned
Intellectual Property and Confidential Information, other than licenses entered
into in the ordinary course of the Company’s and its subsidiaries’ businesses.
The Company has a valid and enforceable right to use all third party
Intellectual Property and Confidential Information used or held for use in
the
respective businesses of the Company and its subsidiaries.
6
(d) To
the
Company’s Knowledge, the conduct of the Company’s business as currently
conducted does not infringe or otherwise impair or conflict with (collectively,
“Infringe”)
any
Intellectual Property rights of any third party or any confidentiality
obligation owed to a third party, and, to the Company’s Knowledge, the
Intellectual Property and Confidential Information of the Company and its
Subsidiaries which are necessary for the conduct of Company’s business as
currently conducted or as currently proposed to be conducted are not being
Infringed by any third party. There is no litigation or order pending or
outstanding or, to the Company’s Knowledge, threatened or imminent, that seeks
to limit or challenge or that concerns the ownership, use, validity or
enforceability of any Intellectual Property or Confidential Information of
the
Company and its subsidiaries and the Company’s use of any Intellectual Property
or Confidential Information owned by a third party, and, to the Company’s
Knowledge, there is no valid basis for the same.
(e) The
consummation of the transactions contemplated hereby and by the other
Transaction Documents will not result in the alteration, loss, impairment of
or
restriction on the Company’s or any of its subsidiaries’ ownership or right to
use any of the Intellectual Property or Confidential Information which is
necessary for the conduct of Company’s and each of its subsidiaries’ respective
businesses as currently conducted or as currently proposed to be
conducted.
(f) The
Company has taken reasonable steps to protect the Company’s rights in its
Intellectual Property and Confidential Information. Each employee, consultant
and contractor who has had access to Confidential Information which is necessary
for the conduct of Company’s and each of its subsidiaries’ respective businesses
as currently conducted or as currently proposed to be conducted has executed
an
agreement to maintain the confidentiality of such Confidential Information
and
has executed appropriate agreements that are substantially consistent with
the
Company’s standard forms thereof, except where the failure to do so has not had
and could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate. Except under confidentiality obligations,
there has been no material disclosure of any Confidential Information to any
third party.
3.13 Environmental
Matters.
To the
Company’s Knowledge, neither the Company nor any subsidiary (if any) (i) is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to
the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous
or
toxic substances (collectively, “Environmental
Laws”),
(ii)
owns or operates any real property contaminated with any substance that is
subject to any Environmental Laws, (iii) is liable for any off-site disposal
or
contamination pursuant to any Environmental Laws, or (iv) is subject to any
claim relating to any Environmental Laws, which violation, contamination,
liability or claim has had or could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate; and there is no pending or,
to
the Company’s Knowledge, threatened investigation that might lead to such a
claim.
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3.14 Litigation.
Except
as described in the SEC Reports, there are no pending material actions, suits
or
proceedings against or affecting the Company, its subsidiaries or any of its
or
their properties; and to the Company’s Knowledge, no such actions, suits or
proceedings are threatened or contemplated.
3.15 No
Directed Selling Efforts or General Solicitation.
Neither
the Company nor any Person (excluding the Placement Agent) acting on its behalf
has conducted any general solicitation or general advertising (as those terms
are used in Regulation D) in connection with the offer or sale of any of the
Securities.
3.16 No
Integrated Offering.
Neither
the Company nor any of its Affiliates, nor any Person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any Company
security or solicited any offers to buy any security, under circumstances that
would adversely affect reliance by the Company on Section 4(2) for the exemption
from registration for the transactions contemplated hereby or would require
registration of the Securities under the Securities Act. For purposes of this
Agreement, “Affiliate” means, with respect to any Person, any other Person which
directly or indirectly through one or more intermediaries Controls, is
controlled by, or is under common control with, such Person.
3.17 Questionable
Payments.
Neither
the Company nor any of its subsidiaries nor, to the Company’s Knowledge, any of
their respective current or former stockholders, directors, officers, employees,
agents or other Persons acting on behalf of the Company or any subsidiary,
has
on behalf of the Company or any subsidiary or in connection with their
respective businesses: (a) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
(b) made any direct or indirect unlawful payments to any governmental officials
or employees from corporate funds; (c) established or maintained any unlawful
or
unrecorded fund of corporate monies or other assets; (d) made any false or
fictitious entries on the books and records of the Company or any subsidiary;
or
(e) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment of any nature.
3.18 Transactions
with Affiliates.
Except
as disclosed in the SEC Reports or as disclosed on Schedule
3.18,
none of
the officers or directors of the Company and, to the Company’s Knowledge, none
of the employees of the Company is presently a party to any transaction with
the
Company or any subsidiary (other than as holders of stock options and/or
warrants, and for services as employees, officers and directors), including
any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the Company’s Knowledge, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
3.19 Internal
Controls.
Except
as set forth in the SEC Reports, the Company is
in
material compliance with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
currently applicable to the Company. The Company and
the
subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general
or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has
established disclosure
controls and procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for
the
Company and designed such disclosure controls and procedures to ensure that
8
material
information relating to the Company, including the subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company’s most recently filed period report under the
1934 Act, as the case may be, is being prepared. The Company's certifying
officers have evaluated the effectiveness of the Company's controls and
procedures as of the end of the period covered by the most recently filed
periodic report under the 1934 Act (such date, the "Evaluation
Date").
The
Company presented in its most recently filed periodic report under the 1934
Act
the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in the Company's internal controls (as such term is defined in Item
308
of Regulation S-B) or, to the Company's Knowledge, in other factors that could
significantly affect the Company's internal controls. The Company maintains
and
will continue to maintain a standard system of accounting established and
administered in accordance with GAAP and the applicable requirements of the
1934
Act.
3.20 Disclosures.
Neither
the Company, the Placement Agent, nor any Person acting on any of their behalf
has provided the Purchasers or their agents or counsel with any information
that
constitutes or might constitute material, non-public information. The written
materials delivered to the Purchasers in connection with the transactions
contemplated by the Transaction Documents do not contain any untrue statement
of
a material fact or omit to state a material fact necessary in order to make
the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
4. REPRESENTATIONS
AND WARRANTIES OF EACH PURCHASER.
Each
Purchaser hereby represents, warrants and covenants with the Company as
follows:
4.1 Legal
Power.
Each
Purchaser has the requisite individual, corporate, partnership, limited
liability company, trust, or fiduciary power, as appropriate, and is authorized,
if such Purchaser is a corporation, partnership, limited liability company,
or
trust, to enter into this Agreement, to purchase the Units hereunder, and to
carry out and perform its obligations under the terms of this Agreement or
any
other Transaction Documents to which it is a party.
4.2 Due
Execution.
This
Agreement has been duly authorized, if such Purchaser is a corporation,
partnership, limited liability company, trust or fiduciary, executed and
delivered by such Purchaser, and, upon due execution and delivery by the
Company, this Agreement will be a valid and binding agreement of such
Purchaser.
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4.3 Access
to Information.
Each
Purchaser represents that such Purchaser has been given full and complete access
to the Company for the purpose of obtaining such information as such Purchaser
or its qualified representative has reasonably requested in connection with
the
decision to purchase the Units. Each Purchaser represents that such Purchaser
has received and reviewed copies of the SEC Reports. Each Purchaser represents
that such Purchaser has been afforded the opportunity to ask questions of the
officers of the Company regarding its business prospects and the Units, all
as
such Purchaser or such Purchaser’s qualified representative have found necessary
to make an informed investment decision to purchase the Units.
4.4 Restricted
Securities.
4.4.1 Each
Purchaser has been advised that none of the Securities have been registered
under the Securities Act or any other applicable
securities laws and that Units
are
being offered and sold pursuant to Section 4(2) of the Securities Act and/or
Rule
506
of Regulation D thereunder, and that the Company’s reliance upon Section 4(2)
and/or Rule 506 of Regulation D is predicated in part on such Purchaser
representations as contained herein.
Each
Purchaser acknowledges that the Securities will be issued as “restricted
securities” as defined by Rule 144 promulgated pursuant to the Securities Act.
None of the Securities may be resold in the absence of an effective registration
thereof under the Securities Act and applicable state securities laws unless,
in
the opinion of the Company’s counsel, an applicable exemption from registration
is available.
4.4.2 Each
Purchaser represents that such Purchaser is acquiring the Units for such
Purchaser’s own account, and not as nominee or agent, for investment purposes
only and not with a view to, or for sale in connection with, a distribution,
as
that term is used in Section 2(11) of the Securities Act, in a manner which
would require registration under the Securities Act or any state securities
laws.
4.4.3 Each
Purchaser understands and acknowledges that the Securities, when issued, will
bear the following legend:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED
FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREOF UNDER THE
SECURITIES ACT OF 1933 AND/OR THE SECURITIES ACT OF ANY STATE HAVING
JURISDICTION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
4.4.4 Each
Purchaser acknowledges that an investment in the Securities is not liquid and
is
transferable only under limited conditions. Each Purchaser acknowledges that
such securities must be held indefinitely unless they are subsequently
registered under the Securities
Act or an exemption from such registration is available. Each Purchaser
is aware of the provisions of Rule 144 promulgated under the Securities Act,
which permits limited resale of restricted securities subject to the
satisfaction of certain conditions
and that such Rule is not now available and, in the future, may not become
available for resale of any of the Securities.
Each
Purchaser is an “accredited investor” as defined under Rule 501 under the
Securities Act.
10
4.4.5 The
representations made by each Purchaser on the Purchaser Signature Page are
true
and correct.
4.5 Purchaser
Sophistication and Ability to Bear Risk of Loss.
Each
Purchaser acknowledges that it is able to protect its interests in connection
with the acquisition of the Units
and
can bear the economic risk of investment in such securities without producing
a
material adverse change in such Purchaser’s financial condition. Each Purchaser,
either alone or with such Purchaser’s representative(s), otherwise has such
knowledge and experience in financial or business matters that such Purchaser
is
capable of evaluating the merits and risks of the investment in the
Units.
4.6 Preexisting
Relationship.
Each
Purchaser has a preexisting personal or business relationship with the Company,
one or more of its officers, directors, or controlling persons, or the Placement
Agent (as defined herein).
4.7 Purchases
by Groups.
Each
Purchaser represents, warrants and covenants that it is not acquiring the Units
as part of a group within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
5. [Intentionally
Omitted].
6. COVENANTS
OF THE COMPANY.
6.1 Use
of
Proceeds.
The
Company intends to employ the proceeds from the purchase and sale of the Units
for general working capital purposes only and not for the repayment of any
existing debt. The proceeds from the purchase and sale of the Units may not
and
will not be used for accrued and unpaid officer and director salaries, payment
of financing related debt, redemption of outstanding notes or equity instruments
of the Company, litigation related expenses or settlements, Placement Agentage
fees, nor non-trade obligations outstanding on a Closing Date. Pending the
Company’s use of the proceeds from the purchase and sale of the Units, the
Company intends to invest the funds in government securities and insured,
short-term, interest-bearing investments of varying maturities.
11
6.2 Further
Registration Statements.
[Intentionally Omitted]
7. CONDITIONS
7.1 Conditions
Precedent to the Obligation of the Company to Close and to Sell the
Units.
The
obligation hereunder of the Company to close and issue and sell the Units to
the
Purchasers at a Closing is subject to the satisfaction or waiver, at or before
such Closing of the conditions set forth below. These conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion.
7.1.1 Accuracy
of the Purchasers’ Representations and Warranties.
The
representations and warranties of each Purchaser shall be true and correct
in
all material respects as of the date when made and as of such Closing as though
made at that time, except for representations and warranties that are expressly
made as of a particular date, which shall be true and correct in all material
respects as of such date.
7.1.2 Performance
by the Purchasers.
Each
Purchaser shall have performed, satisfied, and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to
be
performed, satisfied or complied with by the Purchasers at or prior to such
Closing.
7.1.3 No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any
of
the transactions contemplated by this Agreement.
7.1.4 Delivery
of Purchase Price.
The
Purchase Price for the Units shall have been delivered to the Company on such
Closing.
7.1.5 Delivery
of Transaction Documents.
The
Transaction Documents shall have been duly executed and delivered by the
Purchasers to the Company.
7.2 Conditions
Precedent to the Obligation of the Purchasers to Close and to Purchase the
Units.
The
obligation hereunder of the Purchasers to purchase the Units and consummate
the
transactions contemplated by this Agreement is subject to the satisfaction
or
waiver, at or before such Closing, of each of the conditions set forth below.
These conditions are for the Purchasers’ sole benefit and may be waived by the
Purchasers at any time in their sole discretion.
7.2.1 Accuracy
of the Company’s Representations and Warranties.
Each of
the representations and warranties of the Company in this Agreement and the
other Transaction Documents shall be true and correct in all material respects
as of such Closing, except for representations and warranties that speak as
of a
particular date, which shall be true and correct in all material respects as
of
such date.
12
7.2.2 Performance
by the Company.
The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to
be
performed, satisfied or complied with by the Company at or prior to such
Closing.
7.2.3 No
Suspension, Etc.
Trading
in the Common Stock shall not have been suspended by the SEC or the OTC Bulletin
Board (except for any suspension of trading of limited duration agreed to by
the
Company, which suspension shall be terminated prior to the Closing), and, at
any
time prior to such Closing, trading in securities generally as reported by
Bloomberg Financial Markets (“Bloomberg”)
shall
not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by Bloomberg, or on the
New
York Stock Exchange, nor shall a banking moratorium have been declared either
by
the United States or New York State authorities.
7.2.4 No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any
of
the transactions contemplated by this Agreement.
7.2.5 No
Proceedings or Litigation.
No
action, suit or proceeding before any arbitrator or any governmental authority
shall have been commenced, and no investigation by any governmental authority
shall have been initiated, against the Company or any subsidiary, or any of
the
officers, directors or affiliates of the Company or any subsidiary seeking
to
restrain, prevent or change the transactions contemplated by this Agreement,
or
seeking damages in connection with such transactions.
7.2.6 Notes
and Shares.
At the
Closing, the Company shall have delivered to the Purchasers the Notes (in such
denominations as each Purchaser may request) and the Shares (in such
denominations as each Purchaser may request).
7.2.7 Secretary’s
Certificate.
The
Company shall have delivered to the Purchasers a secretary’s certificate, dated
as of the Closing Date, as to (i) the resolutions adopted by the Board of
Directors approving the transactions contemplated hereby, (ii) the Company’s
Restated Certificate of Incorporation, (iii) the Bylaws, each as in effect
at
such Closing, and (iv) the authority and incumbency of the officers of the
Company executing the Transaction Documents and any other documents required
to
be executed or delivered in connection therewith.
7.2.8 Officer’s
Certificate.
On the
Closing Date, the Company shall have delivered to the Purchasers a certificate
signed by an executive officer on behalf of the Company, dated as of such
Closing Date, confirming the accuracy of the Company’s representations,
warranties, and covenants as of such Closing Date and confirming the compliance
by the Company with the conditions precedent set forth in paragraphs
(7.2.2)-(7.2.5) and (7.2.9) of this Section 7.2 as of such Closing (provided
that, with respect to the matters in paragraphs (7.2.4) and (7.2.5) of this
Section 7.2, such confirmation shall be based on the knowledge of the executive
officer after due inquiry).
13
7.2.9 Material
Adverse Effect.
No
Material Adverse Effect shall have occurred at or before such Closing
Date.
8. PLACEMENT
AGENT/LEGAL FEES.
8.1 Placement
Agent’s Commission.
The
Company acknowledges that it has retained WestPark Capital, Inc. to act as
its
placement agent (the “Placement Agent”). The Company agrees that it will pay the
Placement Agent, at each Closing, the fees (including cash compensation,
issuance of securities and reimbursement of expenses and the like) that it
has
agreed to pay pursuant the agreements between the Company and the Placement
Agent and any other consulting agreement between the Company and the Placement
Agent or its affiliates. The Company represents that there are no other parties
entitled to receive fees, commissions, or similar payments in connection with
the offering described in this Agreement except the Placement Agent. The parties
also agree and acknowledge hereby that such fees shall not be deemed as interest
or fees relating to the Note.
8.2 Legal
Fees.
The
Purchasers and the Company shall each bear their own legal fees in connection
with this Agreement.
9.
MISCELLANEOUS.
9.1 Indemnification.
Each
Purchaser agrees to defend, indemnify and hold the Company harmless against
any
liability, costs or expenses arising as a result of any dissemination of any
of
the Shares by such Purchaser in violation of the Securities Act or applicable
state securities law.
9.2 Governing
Law
- Waiver of Stay, Extension or Usury Laws.
This
Agreement shall be governed by and construed under the laws of the State of
New
York..
The
Company represents and warrants that it does not consider the sale of the Notes
and the Shares together with the payment of all fees and expenses in connection
therewith to be usurious under the usury laws of the State of New York. The
Company covenants (to the extent that it may lawfully do so) that it shall
not
at any time insist upon, or plead, or in any manner whatsoever claim, and shall
resist any and all efforts to be compelled to take the benefit or advantage
of,
any stay or extension law or any usury law or other law which would prohibit
or
forgive the Company from paying all or any portion of the principal of or
interest on the Notes as contemplated herein and therein, wherever enacted,
now
or at any time hereafter in force, or which may effect the covenants or the
performance of this Agreement; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law
and
covenants that it shall not hinder, delay or impede the execution of power
herein granted to the holders of the Notes, but shall suffer and permit the
execution of every such power as though no such law had been enacted. All
agreements between the Company and holders of the Notes, whether now existing
or
hereafter arising and whether written or oral, are hereby limited so
that in no contingency, whether by reason or demand or acceleration
of the final maturity date of the Notes or prepayment or
14
otherwise,
shall the interest contracted for (or any original issue discount that would
be
determined to be interest) , charged, received, paid or agreed to be paid
to holders
exceed the maximum
amount permissible under the laws of the State of New York (hereinafter the
“Applicable
Law”).
If,
from any circumstances whatsoever, interest (or any original issue discount
that would be determined to be interest) would otherwise be payable to any
holder of the Notes in excess of the maximum amount permissible under Applicable
Law, the interest
payable to such holder shall be reduced to the maximum amount permissible under
Applicable Law, and if from any circumstances such holder shall ever receive
anything deemed
interest by the Applicable Law in excess of the maximum amount permissible
under
the Applicable Law, an amount equal to the excessive interest shall be applied
to the reduction of the principal hereof and not to the payment of interest,
or
if such excessive amount of interest exceeds the unpaid principal balance of
principal hereof, such excess shall be refunded to the Company as applicable.
All interest paid or agreed to be paid to the holders of the Notes shall, to
the
extent permitted by Applicable Law, be amortized, prorated, allocated and spread
throughout full period (including any renewal or extension) until payment in
full of the principal so that the interest hereon for such full period shall
not
exceed the maximum amount permissible under the Applicable Law.
9.3 Successors
and Assigns.
Except
as otherwise expressly provided herein, the provisions hereof shall inure to
the
benefit of, and be binding upon, the successors, assigns, heirs, executors,
and
administrators of the parties hereto.
9.4 Entire
Agreement.
This
Agreement and the Exhibits hereto and thereto, and the other documents delivered
pursuant hereto and thereto, constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and no
party shall
be
liable or bound to any other party in any manner by any representations,
warranties, covenants, or agreements except as specifically set forth herein
or
therein. Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto and their respective successors
and assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided herein.
9.5 Severability.
In case
any provision of this Agreement shall be invalid, illegal, or unenforceable,
it
shall to the extent practicable, be modified so as to make it valid, legal
and
enforceable and to retain as nearly as practicable the intent of the parties,
and the validity, legality, and enforceability of the remaining provisions
shall
not in any way be affected or impaired thereby.
9.6 Amendment
and Waiver.
Except
as otherwise provided herein, any term of this Agreement may be amended, and
the
observance of any term of this Agreement may be waived (either generally or
in a
particular instance, either retroactively or prospectively, and either for
a
specified period of time or indefinitely), with the written consent of the
Company and the Purchasers, or, to the extent such amendment affects only one
Purchaser, by the Company and such Purchaser. Any amendment or waiver effected
in accordance with this Section shall be binding upon each future holder of
any
security purchased under this Agreement (including securities into which such
securities have been converted) and the Company.
9.7 Notices.
All
notices and other communications required or permitted hereunder shall be in
writing and shall be effective when delivered personally, or sent by telex
or telecopier
(with receipt confirmed), provided that a copy is mailed by registered mail,
return receipt requested, or when received by the addressee, if sent by Express
Mail, Federal Express or other express delivery service (receipt requested)
in
each case to the appropriate address set forth below:
15
| If to the Company: | StrikeForce Technologies, Inc | |
| ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, | ||
| ▇▇▇▇▇ ▇▇▇ | ||
| ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
| Attention: ▇▇▇▇ ▇. ▇▇▇ | ||
|
Chief
Executive Officer
|
||
| Tel: (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| With a copy to: | ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, LLP | |
| ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| ▇▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||
| Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq. | ||
| Tel. (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| Fax. (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| If to the Purchaser: | As the address set forth on the Purchaser’s Signature Page | |
| With a copy to: | Westpark Capital, Inc. | |
| c/oWelfleet Partners | ||
|
▇▇▇
▇▇▇▇ ▇▇▇▇▇
|
||
| ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ | ||
| Attention: ▇▇▇▇ ▇ ▇▇▇ | ||
| (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| (▇▇▇) ▇▇▇-▇▇▇▇ | ||
9.8 Faxes
and Counterparts.
This
Agreement may be executed in one or more counterparts. Delivery of an executed
counterpart of the Agreement or any exhibit attached hereto by facsimile
transmission shall be equally as effective as delivery of an executed hard
copy
of the same. Any party delivering an executed counterpart of this Agreement
or
any exhibit attached hereto by facsimile transmission shall also deliver an
executed hard copy of the same, but the failure by such party to deliver such
executed hard copy shall not affect the validity, enforceability or binding
nature effect of this Agreement or such exhibit.
9.9 Consent
of Purchasers.
As used
in the Agreement, “consent of the Purchasers” or similar language means the
consent of holders of not less than 50% of the total of the outstanding Notes
owned by Purchasers on the date consent is requested.
9.10 Titles
and Subtitles.
The
titles of the paragraphs and subparagraphs of this Agreement are for convenience
of reference only and are not to be considered in construing this
Agreement.
16
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth on the Purchase Signature Page hereto.
| PURCHASER | ||
| (By Counterpart Form - SP Pages) | ||
| STRIKEFORCE TECHNOLOGIES, INC. | ||
| |
|
|
| By: | /s/ ▇▇▇▇ ▇▇▇ | |
|
▇▇▇▇ ▇▇▇ |
||
| Chief Executive Officer | ||
17
PURCHASER
SIGNATURE PAGE
The
undersigned Purchaser has read the Unit Purchase Agreement dated as of _______
__, 2006 and acknowledges that execution of this Purchaser Signature Page shall
constitute the undersigned’s execution of such agreement.
I
hereby
subscribe for an aggregate of _________ Units at $25,000.00 per Unit, each
Unit
consisting of a $25,000 20% Promissory Note and 250,000 Shares of Common Stock,
and hereby deliver good funds with respect to this subscription for the
Units.
I
am a
resident of the State of __________________.
Please
print above the exact name(s) in which the Units are to be
held
My
address is:
SP-1
I
acknowledge that the offering of the Units is subject to the Federal securities
laws of the United States and state securities laws of those states in which
the
Units are offered, and that, pursuant to the U.S. Federal securities laws and
state securities laws, the Units may be purchased by persons who come within
the
definition of an “Accredited
Investor”
as
that
term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act (“Regulation
D”).
By
initialing one of the categories below, I represent and warrant that I come
within the category so initialed and have truthfully set forth the factual
basis
or reason I come within that category. All information in response to this
paragraph will be kept strictly confidential. I agree to furnish any additional
information that the Company deems necessary in order to verify the answers
set
forth below.
NOTE:
You must either initial that at least ONE
category.
Individual
Purchaser:
(A
Purchaser who is an individual may initial either Category I, II, or
III)
|
Category
I
|
_____
|
I
am a director or executive officer of the
Company.
|
| Category II | _____ | I am an individual (not a partnership, corporation, etc.) whose individual net worth, or joint net worth with my spouse, presently exceeds $1,000,000. |
| Explanation. In calculation of net worth, you may include equity in personal property and real estate, including your principal residence, cash, short term investments, stocks and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property. |
| Category III |
_____
|
I
am an individual (not a partnership, corporation, etc.) who had an
individual income in excess of $200,000 in 2004 and 2005, or joint
income
with my
spouse
in excess of $300,000 in 2004 and 2005, and I have a reasonable
expectation of reaching the same income level in
2006.
|
SP-2
Entity
Purchasers:
(A
Purchaser which is a corporation, limited liability company, partnership, trust,
or other entity may initial
either Category IV, V, VI, VII or VIII)
|
Category
IV
|
_____
|
The
Purchaser is an entity in which all of the equity owners are “Accredited
Investors”
as defined in Rule 501(a) of Regulation D. If
relying upon this category alone, each equity owner must complete
a
separate copy of this
Agreement.
|
| _____________________________________________________ |
| _____________________________________________________ |
| _____________________________________________________ |
| (describe entity) |
| Category V | _____ | The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units offered, whose purchase is directed by a “Sophisticated Person” as described in Rule 506(b)(2)(ii) of Regulation D. |
| Category VI |
_____
|
The
Purchaser is an organization described in Section 501(c)(3) of
the
Internal Revenue Code, corporation, Massachusetts or similar business
trust,
or
partnership, not formed for the specific purpose of acquiring the
Units,
with total assets in excess of
$5,000,000.
|
| _____________________________________________________ |
|
|
_____________________________________________________
|
| _____________________________________________________ |
| (describe entity) |
| Category VII | _____ | The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940. |
| _____________________________________________________ |
|
|
_____________________________________________________
|
| _____________________________________________________ |
| (describe entity) |
SP-3
Executed
this _____ day of _________, 2006 at ____________________,
________________.
SIGNATURES
INDIVIDUAL
|
_____________________________________________
Signature
(Individual)
|
_______________________________________________
Name
_______________________________________________
Street
address
|
|
Address
to Which Correspondence Should be
Directed
|
|
_____________________________________________
Signature
(All record holders should sign)
|
_______________________________________________
City,
State and Zip Code
|
|
____________________________________________
Name(s)
Typed or Printed
|
______________________________________________
Tax
Identification or Social Security Number
(
)
Telephone
Number
|
|
_____________________________________________
Name(s)
Typed or Printed (All recorded holders should sign)
|
SP-4
CORPORATION,
PARTNERSHIP, TRUST ENTITY OR OTHER
|
Address
to Which Correspondence Should be
Directed:
|
|
____________________________________________
Type
of Entity (i.e., corporation, partnership, etc.)
|
__________________________________________
▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
|
By:_________________________________________
*Signature
|
__________________________________________
Tax
Identification or Social Security Number
|
|
_____________________________________________
State
of Formation of Entity
|
___________________________________________
City,
State and Zip Code
|
|
Name
Typed or Printed
|
|
Its: __________________________________________
Title
|
(
)
Telephone
Number
|
*If
Units
are being subscribed for by an entity, the Certificate of Signatory must also
be
completed.
SP-5
CERTIFICATE
OF SIGNATORY
To
be
completed if Units are being subscribed for by an entity.
I,__________________________________,
am the
____________________________________________________________________________of_____________
_____________________________________________________(the
“Entity”).
I
certify
that I am empowered and duly authorized by the Entity to execute and carry
out
the terms of the Unit Purchase Agreement and to purchase and hold the
Securities. The Unit Purchase Agreement has been duly and validly executed
on
behalf of the Entity and constitutes a legal and binding obligation of the
Entity.
IN
WITNESS WHEREOF, I have hereto set my hand this ______ day of _________,
2006.
|
________________________________________________
Signature
|
SP-6
ACCEPTANCE
AGREED
AND ACCEPTED:
STRIKEFORCE
TECHNOLOGIES, INC.
By:____________________________________________
▇▇▇▇
▇▇▇,
Chief Executive Officer
Date:
__________ __, 2006
SP-7
COMPANY
DISCLOSURE SCHEDULE
Capitalized
terms not otherwise defined in this Company Disclosure Schedule shall have
the
same meaning as in the Agreement.
The
disclosure of any matter in this Company Disclosure Schedule should not be
construed as indicating that such matter is necessarily required to be disclosed
in order for any representation or warranty in the Agreement to be true and
correct in all material respects. Any description of any document included
in
this Company Disclosure Schedule is qualified in all respects by reference
to
such document.
Schedules
SP-8
SCHEDULE
3.6
MATERIAL
ADVERSE CHANGES
Schedule 3.6
SP-9
SCHEDULE
3.9
CONFLICTS,
BREACHES, VIOLATIONS AND/OR DEFAULTS
Schedule 3.9
SP-10
SCHEDULE
3.10
TAX
MATTER
Schedules 5.3, 5.4
SP-11
SCHEDULE
6.2
FURTHER
REGISTRATION STATEMENTS
None