ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (along all of the documents, schedules
and exhibits made a part hereof, the "Agreement") dated as of September 1 lth,
2003 (the "Effective Date"), is by and among StrikeForce Technical Services
Corporation d/b/a StrikePorce Technologies, Inc ., a New Jersey corporation
("Buyer"), NetLabs .com Inc., a New Jersey corporation ("Seller"), and Xxxxxxx
Xxxxxxxxx (the "Developer").
ARTICLE 1. THE ASSETS
1.1 Background. Seller desires to sell, and Buyer desires to purchase,
all of Seller's technology, products and related assets on the terms and
conditions described in this Agreement. The Developer developed the Seller's
assets and Intellectual Property (as defined below) therein, and the Developer
is entering into' this Agreement to give to Buyer, among other things, the
benefit of certain representations, warranties, covenants and contractual rights
upon which Buyer is relying in consummating the transactions described herein .
1.2 Definitions. For purposes of this Agreement, and in addition to
the terms defined elsewhere in this Agreement, the following terms shall have
the respective meanings set forth below:
"Copyrights" means all copyrights in both published and unpublished
works and any registrations or applications for registration of copyrights in
any jurisdiction throughout the world.
"Intellectual Property Rights" means all forms of legal rights and
protections in any country of the world, including all right, title and interest
arising under common and statutory law to all Patents, Copyrights, Trademarks,
Trade Secrets, any similar, corresponding ding or equivalent rights relating to
intangible intellectual property, and all applications, registrations,
issuances, divisions, continuations, renewals, reissuances and extensions of the
foregoing.
"Net Revenues" means any monies actually received by Buyer and
recognized as revenues on a cash. basis during a particular calendar month for
the licensing or other provision (e.g., on an application service provider
basis) of specific Products to a third party licensee, or the maintenance or
support of such Products, less any (a) fees or commissions paid to sales
persons, brokers, agents, distributors and other sales personnel, and (b) any
third party out-ofpocket fees, costs and taxes associated with the licensing or
provision, maintenance or support of such Programs, including without limitation
ASP hosting fees, telecommunication fees, sales and use tax, shipping and
handling. The term "Net Revenues" excludes fees or monies received by Buyer for
consulting services, or for any Programs or products other than the Buyer's
Products.
"Object Code" means the Programs in a form capable of direct execution
by a computer. The term Object Code generally connotes the compiled, assembled
or translated form of source code.
"Patents" means all letters patents, provisional patents, design
patents, PCT filings and other rights to inventions or designs, together with
any extensions, reexaminations I-PH/1876327 .3 09/05/03 1 and reissues of such
letters patent, patents of addition, patent applications, disclosure documents,
divisions, continuations, continuations-in-part, and any subsequent filings in
any country or jurisdiction claiming priority therefrom.
"Person" means any individual, partnership,limited liability company,
limited liability partnership, corporation, association, joint stock company,
trust, joint venture, unincorporated organization or Governmental Authority.
"Product" means a Program or technology developed by Seller and/or
Developer that is transferred and assigned over to Buyer pursuant to this
Agreement.
"Program" means a computer program in Object Code or Source Code.
"Source Code" means the Programs as written in a programming language
such as, for example, C++.
"Trademarks" means registered trademarks, registered service marks,
trademark and service xxxx applications and unregistered trademarks and service
marks, brand names, trade names, logos, certification marks, trade dress, and
all goodwill associated with the foregoing throughout the world, and
registrations in any jurisdictions of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application.
"Trade Secrets" means all know-how, trade secrets, confidential
information, customer lists, technical information, data, process technology,
plans, drawings, innovations, designs, ideas, proprietary information, blue
prints, and all documentation related to the foregoing, except for any such item
that is generally available to the public.
1 .3 Purchase and Sale . Subject to the terms and conditions of this
Agreement, Seller and the Developer each hereby sells, transfers, delegates,
assigns, conveys and delivers to Buyer, all of Seller's and the Developer's
respective rights, duties, obligations, titles and interests in and to the
following (collectively, the "Assets"):
1.3.1 All of Seller's and Developer's Programs and other software, in
both Source Code form and Object Code form, all documentation and information
regarding the same, together with all prior versions and releases thereto, and
together with all Intellectual Property Rights inherent therein or appurtenant
thereto (each, a "Product" as defined above, and collectively, the "Products").
The Products fall in to two categories:
(a) All Products used in connection with the centralized
out-of-band authorization systems often referred to as "COBAS" (collectively,
the "COBAS Products").
(b) All other Products (collectively, the "Non-COB AS
Products"), including without limitation the "NetFirewall" firewall program, the
"MailSecure" anti-virus program, and the "Security Central" enterprise security
management program.
1.3.2 All of the oral, written or other agreements between Seller
and a third party, or between the Developer and a third party, (collectively,
the "Assumed Contracts"), including without limitation any licenses for
third-party software applications embedded into the architecture and necessary
for the operation of the Programs, and all original media and license keys
related to the Assumed Contracts.
1.3.3 Seller's and Developer's Trademarks, including without
limitation the terms CENTRALIZED OUT-OF-BAND-AUTHENTICATION SYSTEM, C.O.B.A.S.,
COBAS, NETFIREWALL, MAILSECURE, and SECURITY CENTRAL, and the goodwill
represented thereby.
1.3.4 Seller's Patents and Developer's Patents, including without
limitation :
(a) U.S. Application No. 09/655,297 by Ram, Xxxxxxxxx,
"Out-ofband security networks for computer network applications" (filed Sep. 5,
2000).
(b) U.S. Disclosure Document No. 499,547 by Ram Xxxxxxxxx,
"NetCard - Method and apparatus for securing credit card transactions for
e-commerce" (filed Sep. 7, 2001) (since abandoned).
(c) U.S. Application No. 60/367,223 by Ram Xxxxxxxxx, "
..Methods and apparatus for a computer network firewall which can be configured
dynamically via an authentication mechanism" (provisional application filed
April 9, 2002).
(d) U.S. Application No. 101406,228 by Ram Xxxxxxxxx,
"Methods and apparatus for a computer network firewall which can be configured
dynamically via an authentication mechanism" (filed April 4, 2003) (claims
priority under provisional application No. 60/367,223 filed April 9, 2002).
(e) U.S. Application by Ram Xxxxxxxxx, "Methods and
apparatus for authenticating a user via a centralized out-of-band platform."
(provisional filed July 2002, full application filed July 19, 2003).
1.3.5 All other hardware, software and other information
technology of Seller and Developer.
1.3.6 All other Intellectual Property Rights of Seller and
Developer .
1.4 Encumbrances. The Assets are transferred by Seller and the
Developer to Buyer free of any lien, charge, security interest, mortgage, pledge
or other encumbrance of any nature whatsoever ("Encumbrance").
1.5 Excluded Assets. Buyer is not purchasing or assuming obligations
with respect to any of the following assets of Seller or Developer
(collectively, the "Excluded Assets"):
1.5.1 Any rights of Seller or Developer under this Agreement.
1.5.2 Any computer hardware of Seller or Developer.
1.5.3 Any of Seller's or Developer's accounts receivable.
1.5.4 Any cash of Seller or Developer .
1.5.5 Any of Seller's or Developer's corporate and financial
records.
1.6 No Liabilities Assumed . Buyer assumes no liability other than as
expressly provided by this Agreement. Buyer shall not assume any Liabilities
arising out of any breach by Seller of any provision of any Assumed Contract or
any infringement or other action of Buyer .
ARTICLE 2 . FINANCIAL PROVISIONS
2.1 Purchase Price . As noted, herein, in consideration of the grant,
sale, conveyance, assignment, transfer and delivery of the Assets to the Buyer
by Seller and the Developer, the Buyer has paid, and the Seller and the
Developer have each received from the Buyer the amount of One Dollar ($1 .00)
(the "Purchase Price"), the receipt and sufficiency of which is hereby
acknowledged. The Purchase Price does not include (i) any expenses reimbursed to
the Buyer under the Assumed Contracts, (ii) any fees paid prior to the Effective
Date under the Assumed Contracts, or (iii) any revenue generated under the terms
of any other contract or agreement .
2.2 Royalties) Buyer will also pay Seller ten percent (10%) of the
Net Revenues received by Buyer for th~ Products (collectively, the "Royalties").
The Royalties will apply to Net Revenues received during a period of five (5)
years period beginning September 1, 2003, and continuing through August 31, 2008
(the "Royalty Period") . i 2.3 Calculatidn and Payment of Royalties . During the
Royalty Period : 2.3 .1. Within thirty (30) days of the end of each calendar
month, Buyer will prepare and provide repo'r'ts (by email, in hard copy, or via
a secure web site), detailing the Net Revenues for each of the!Products .
2.3.2 Buyer will promptly thereafter mail or wire transfer any
Royalties due to Seller as stated in the Reports .
2.3.3 The parties acknowledge and agree that in any month when
Buyer is unable to pay all off its overhead and other expenses and the Royalties
then accrued and due to Seller, the Buyer shall pay all of Buyer's overhead
first (including without limitation all of Buyer's office and equipment lease
and rent expenses, all hosting and other expenses to provide services to Buyer's
customers, third-party sales and marketing commissions and fees, expenses
related to obtaining additional. customers, employee payroll, and independent
contractor and consulting fees), and then pay the Royalties due to Seller . Any
of Buyer's late payments of Royalties or other fees to Seller shall not be a
default under this Agreement . Jn the event any Royalty payment or other amount
due under this Agreement is more than four months overdue, such payment or
overdue amount shall be assessed simple interest at the Prime Rate, as published
in The Wall Street Journal, eastern edition .
2.4 Stock. In addition to the Purchase Price, Royalties and other
consideration set forth in this Agreement, Buyer agrees to issue 1,140,000
shares of its Common Stock (the "Shares") to Seller as additional consideration
for the Assets. 1-PW1876327.3 09105143
2.5 Audit. For the duration of the Royalty Period, and for six months
thereafter, Seller shall have the right to audit the records of Buyer used to
calculate Royalties due Seller by Buyer under this Agreement. Upon reasonable
prior notice to the Buyer, and upon the Seller's auditors signing appropriate
confidentiality agreements that protect the Buyer no less than the
confidentiality provisions of this Agreement, the Seller's auditors shall have
access to the relevant books and records of the Buyer necessary to conduct a
review or audit thereof . Such limited access shall be available not more than
once each calendar year, during Buyer's normal business hours . Upon completion
of the audit, the parties agree that any overpayment determined by the audit
will be promptly refunded, and that any underpayment determined by the audit
will be promptly invoiced and paid .
ARTICLE 3 . REPRESENTATIONS AND WARRANTIES
3.1 Mutual Warranties . Each party to this Agreement represents and
warrants to each other party to this Agreement as follows :
3.1.1 Each party has the full right, power and authority to
execute, deliver and carry out the terms of this Agreement and all documents and
agreements necessary to give effect to the provisions off this Agreement and to
consummate the transactions contemplated on the part of such party hereunder .
3.1.2 This Agreement and all other agreements and documents
executed in connection, herewith by each party, upon due execution and delivery
thereof, shall constitute the valid and binding obligations of each such party,
enforceable in accordance with, its respective terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity .
3.2 Seller and Developer Warranties . As a material inducement to
Buyer to enter into this Agreement and to consummate the transactions
contemplated herein, Seller and Developer, jointly and severally, represent,
warrant and covenant to Buyer as follows :
3.2.1 Seller is a corporation duly organized and validly existing
under the laws of its jurisdiction of incorporation, and is in good standing and
duly qualified to do business as a . foreign corporation in all jurisdictions
where the operation, of its business or the ownership of its properties make
such qualification necessary.
3.2.2 Except for Seller and the Developer, no other person or
entity owns or holds, has any interest in, the Programs .
3.2.3 Except for Developer's rights transferred to Buyer under
this Agreement, Seller has good, valid and marketable title to all of the
Assets, free and clear of any Encumbrances.
3.2.4 Seller and Developer have each advised Buyer of all Program
and documentation errors and defects known to Seller and Developer as of the
Effective Date of this Agreement which can or do materially affect performance
of the Programs . t-PR'1876327 .3 09/0 5 /03 5
3.2.5 In the event of any alleged breach of this Agreement, or
arising out ofthe transactions contemplated hereunder, neither Seller nor
Developer will seek injunctive or other equitable relief, but will only seek
monetary damages, which, if awarded, shall serve to make Seller and/or Developer
whole.
3.2.6 The Products do not contain any lock, clock, timer,
counter, copy protection feature, replication device or defect ("virus" or
"worm" as such terms are commonly used in the computer industry), CPU serial
number reference, or other device which : (i) might lock, disable or erase the
Programs ; (ii) prevent Buyer or any user from fully using the Programs; or
(iii) require action or intervention by Seller or any other Person or entity to
allow Buyer to use the Programs (collectively, "Locks"). UNDER NO CIRCUMSTANCES
SHALL SELLER OR ANY DEVELOPER INSERT, ACTIVATE OR OPERATE, NOR ATTEMPT TO
INSERT, ACTIVATE OR OPERATE, ANY DEVICE DESCRIBED IN THIS SECTION, NOR SHALL IT
DEACTIVATE OR REPOSSESS THE PRODUCTS OR OTHER PROGRAMS (NOR ATTEMPT TO DO SO) BY
ELECTRONIC MEANS OR OTHERWISE .
3.3 Further Representations and Warranties of Seller and Developer
Regarding the Shares. Seller and Developer each represents and warrants to Buyer
as follows :
3.3.1 It is acquiring the Shares for its own account for
investment only and not with a view to or for sale in connection with the
distribution thereof.
3.3.2 It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
transactions contemplated by this Agreement, including, without limitation, the
acquisition of the Shares, and making an informed investment decision with
respect thereto . Seller understands that it must bear the economic risk of an
investment in the Shares indefinitely unless the Shares are registered pursuant
to the Securities Act of 1933, as amended (the "Securities Act"), or an
exemption from registration is available.
3.3.3 It is an "Accredited Investor" as such term is defined in
Rule 501 under the Securities Act .
3.3.4 It has had the opportunity to ask questions and receive
answers concerning the Company, as well as the opportunity to obtain additional
information necessary to verify the accuracy of information furnished by the
Company.
3.3.5 It understands that the Shares have not been registered
under the Securities Act or any state securities laws, and may not be
transferred unless subsequently registered thereunder or pursuant to an
exemption from registration, and that a legend indicating such restrictions will
be placed on the certificates representing such Shares . Seller understands that
the Company has no present intention of registering any of the Shares . Seller
also understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow Seller to transfer all or any portion of, the Shares in
the amounts or at the times Seller might propose .
3.4 Further Assurances. Seller and each Developer agrees and covenants
that on the Effective Date or promptly thereafter: 1 oPH/1876327 . 3 09105103 6
3.4.1 Seller and each Developer shall deliver to Buyer such bills
of sale, endorsements, assignments and other good and sufficient instruments of
assignment, transfer and conveyance, in form and substance reasonably
satisfactory to Buyer, as shall be effective to vest in Buyer all, of Seller's
and Developer's title to the Assets.
3.4.2 Seller and Developer shall each execute, acknowledge and
deliver all such further assignments, transfers, conveyances and other
instruments as may be necessary to assign, transfer and convey to and vest in
Buyer and more fully protect its right, title and interest in the Assets, and as
otherwise may be appropriate to carry out the transactions contemplated by this
Agreement, including complete schedules or lists of COBAS Products, Non-COBAS
Products, Patents, Trademarks, Copyrights and Trade Secrets.
3.4.3 Each of Seller and Developer agrees to enter into a
stockholders agreement with the Buyer which shall contain, among others,
provisions restricting the transferability of the Shares and a right of first
refusal in favor of the Buyer . Unless and until such a stockholders agreement
has been executed, after which time the Shares shall become subject to the
provisions of such stockholders agreement, each of Seller and Developer agrees
that it shall not sell, assign, mortgage, hypothecate, transfer or pledge,
create a security interest in, or lien or encumbrance on (each a "Transfer"),
the Shares or any interest therein .
3.4.4 If requested by the managing underwriter of a public
offering involving the Buyer, each of Seller and Developer agrees not to
Transfer any of the Shares (other than shares of Common Stock registered in such
offering) during the period requested. by the managing underwriter, if any, not
to exceed 180 days, following the effective date of the registration statement
covering such a public offering.
ARTICLE 4. MISCELLANEOUS PROVISIONS
4.1 Entire Agreement. This Agreement and the exhibits, schedules and
other documents signed by the parties in connection herewith constitute the
entire agreement of the parties with respect to the subject matter hereof, and
except as specifically provided herein, no change, modification, amendment,
addition or termination of this Agreement or any part thereof shall be valid
unless in writing and signed by or on behalf of the party to be charged
therewith.
4.2 Confidential Information . Each party ("recipient") agrees to keep
confidential indefinitely all proprietary and confidential information of the
other party ("disclosing party"), including without limitation all Products,
Patents, Copyrights, Trade Secrets, Royalty reports and related information,
this Agreement, technical information, business information, sales information,
customer and potential customer lists and identities, product sales plans,
sublicense agreements, inventions, developments, discoveries, software,
know-how, methods, techniques, formulae, data, processes and other trade secrets
and proprietary ideas, whether or not protectable under patent, trademark,
copyright or other areas of law, that the recipient has access to or receives
(collectively, "Confidential Information") . Confidential Information does not
include information as evidenced by written records that (a) is or becomes
publicly available through no fault of the recipient, (b) was already known to
the recipient at the time it was received by the recipient, (c) is independently
developed by or on behalf off the recipient I-PH/1870327 . 3 09/03/03 7
receiving party without reference or access to such information, or (d) is
received from a third party who is under no obligation of confidentiality to the
disclosing party .
4.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be deemed to have been duly given or made for all purposes
if (i) hand delivered, (ii) sent by a nationally recognized overnight courier or
(iii) sent by telephone facsimile transmission (with prompt oral confirmation of
receipt) to the addresses listed below, or at such other address as any party
may specify by notice given to the other party in accordance with this Section .
The date off giving of any such notice shall be the date of hand delivery, the
date sent by telephone facsimile, and the day after delivery to the overnight
courier service .
If to Seller with a copy to
--------------------------------------------------------------------------------
XxxXxxx.xxx, Inc.
0 Xxxxxxxxx Xxxx
Xxx Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxx
Phone No.:(000) 000-0000
If to Buyer with a copy to
--------------------------------------------------------------------------------
StrikeForce Technologies, Inc. Xxxxxx, Xxxxx & Bockius, LLP
1090 Xxxx Xxxxxxx Post Road, 0000 Xxxxxx Xxxxxx
Xxxxx 000 Xxxxxx, Xxx Xxxxxx 00000 Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Executive Officer Attention: Xxxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000 Telecopy No. (000) 000-0000
If to the Developer
---------------------------------------
Xxxxxxx Xxxxxxxxx
0 Xxxxxxxxx Xxxx
Xxx Xxxxxx, XX 00000
Phone No.: (000) 000-0000
4.4 Bankruptcy. During the Royalty Period, in the event StrikeForce
seeks reorganization under any bankruptcy act, or consents to the filing of a
petition seeking such reorganization, or has a decree entered against it by a
court of competent jurisdiction appointing a receiver, liquidator, trustee, or
assignee in bankruptcy or in insolvency covering all or substantially all of
StrikeForce's property or providing for the liquidation of StrikeForce's
property or business affairs, then, as may be permitted by the United States
Bankruptcy Code or other applicable state and federal laws, StrikeForce shall
assign the Products back to NetLabs and, in return for such assignment, NetLabs
shall issue or otherwise transfer to StrikeForce shares of NetLabs stock and/or
cash or other assets that shall have a fair market value equal to the fair
market value of the Products as of the date of the assignment of the Products.
4.5 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument,
4.6 Governing Law, Severability . This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New Jersey
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New Jersey or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
Jersey . Should any clause, section or part of this Agreement be held or
declared to be void or illegal for any reason, all other clauses, sections or
parts of this Agreement shall nevertheless continue in full force and effect.
4.7 Arbitration. All controversies or claims arising out of or
relating to this Agreement or the interpretation, performance, breach,
termination or validity thereof (collectively, "Disputes") shall be submitted to
binding arbitration under the Commercial Arbitration Rules of the American
Arbitration Association in Princeton, New Jersey . Any Dispute that in the
aggregate is valued at less than $500,000 shall be heard by one independent
arbitrator; otherwise, by three independent arbitrators . Each party's discovery
shall be limited to 25 interrogatories, 25 requests for production, and 3
depositions . Any award rendered by the arbitrator(s) shall be final and binding
upon the parties . Judgment upon the award may be entered in any court of
competent jurisdiction. Requests for injunctive relief and emergency measures
may be submitted at any time in accordance with the Optional Rules for Emergency
Measures of Protection of the Commercial Arbitration Rules . Each party hereto
consents to binding arbitration as the sole means of dispute resolution and
agrees that service of process in any such proceeding shall be sufficient if
accomplished in accordance with the notice provisions set forth in the
Agreement.
4.8 Assignment. This Agreement shall be binding upon, and inure to the
benefit of, the parties and their respective successors and permitted assigns .
Neither this Agreement nor any rights or obligations hereunder shall be
assignable by any party.
4.9 Expenses. Each of Buyer, Seller and Developer shall bear all of
their own expenses in connection with the execution, delivery and performance of
this Agreement and the transactions contemplated hereby, including all fees and
expenses of its agents, representatives, counsel and accountants.
4.10 No Third Party Beneficiaries. Nothing in this Agreement is
intended to confer benefits, rights or remedies unto any person or entity other
than. the parties and their permitted successors and assigns.
4.11 Benefit of Counsel. This Agreement has been negotiated between
unrelated parties who are sophisticated and knowledgeable in the matters
contained in this Agreement and who have acted in their own self interest . In
addition, each party has been represented by legal counsel, or has had the
opportunity to retain legal counsel to review this Agreement . The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the
purposes of the parties, and this Agreement shall not be .interpreted or
construed against any party to this Agreement because that party or any attorney
or representative for that party drafted this Agreement or participated in the
drafting of this Agreement.
Whereof, and intending to be legally bound hereby, the parties have
executed this Agreement as of the Effective Date .
Seller XxxXxxx.xxx Inc. Buyer StriikeForce Technical Services
Corporation d/b/a StrikeForce
Technologies, Inc.
Type New Jersey Corporation Type New Jersey Corporation
Signature /s/ Xxxxxx Xxxx Signature /s/Xxxx X. Xxx
--------------- -------------
Name Xxxxxx Xxxx Name Xxxx X. Xxx
Title President Title CEO
Developer Xxxxxxx Pemmaraja Developer
Signature/s/Xxxxxxx Pemmaraja Signature
-------------------
Name Xxxxxxx Pemmaraja Name
Date September 11, 2003 Date
AMENDMENT TO
ASSET PURCHASE AGREEMENT
Between
STRIKE FORCE TECHNOLOGIES, INC. & XXXXXXX.XXX, INC.
WHEREAS StrikeForce Technologies, Inc and NetLabs .com, Inc. have entered
into an asset purchase agreement on September 11, 2003.
WHEREAS StrikeForce Technologies has yet to perform. in accordance with the
intent and the purpose of this agreement (the generation of revenue).
NOW THEREFORE, be it known, the agreed resolution is the change of the
royalty period as stated in Article 2. Financial Provisions, subsection
2.2, which is 5 years is to be extended to 1 .0 years. This change is
effective as of September 11, 2003 and is to run till 8/31/2013.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Addendum as of the date September 2, 2004.
For StrikeForce Technologies, Inc. For Xxxxxxx.xxx, Inc.
Xxxx X. Xxx Xxxxxx Xxxx
-------------- --------------
Print Name Print Name
/s/Xxxx X. Xxx /s/Xxxxxx Xxxx
-------------- --------------
Signature Signature
CEO President
-------------- --------------
Title Title
AMENDMENT NO. 2 TO
ASSET PURCHASE AGREEMENT
Between
STRIKEFORCE TECHNOLOGIES, INC. & XXXXXXX.XXX, INC.
WHEREAS StrikeForce Technologies, Inc and XxxXxxx.xxx, Inc. are parties to that
certain Asset Purchase Agreement (the "Agreement") of September 11, 2003, as
amended from time to time; and
WHEREAS StrikeForce Technologies has attempted without success to secure
additional capital investment to continue for its operations and has requested
XxxXxxx.xxx to waive the royalty agreements provided for by Sections 2.2 and 2.3
of the Agreement; and
WHEREAS without immediate additional capital investment, StrikeForce
Technologies will be unable to continue operations or to develop commercial
applications for the assets purchased from XxxXxxx.xxx; and
WHEREAS the royalty payments provided for in the Agreement are unacceptable to
Cornell Capital Partners LLP, a private equity investor that has executed a term
sheet with StrikeForce Technologies to provide funding of as much as $11,
000,000; and
WHEREAS StrikeForce Technologies and Xxxxxxx.xxx believe that it is in their
mutual interest that StrikeForce Technologies proceed with the capital
investment offered by Cornell Capital Partners; and
WHEREAS StrikeForce Technologies and XxxXxxx.xxx desire to amend the Agreement
to modify the consideration to be paid to NetLabs pursuant to the Agreement so
as to eliminate the royalty payments and to provide for the issuance of options
to purchase the common stock of StrikeForce Technologies in order to facilitate
the capital investment offered by Cornell Capital Partners;
NOW THEREFORE, in consideration of the mutual covenants and for other good and
valuable consideration, the adequacy of which is hereby acknowledged,
1. Sections 2.2 and 2.3 of the Agreement are deleted in their entirety.
2. In lieu of the royalty payments provided for by Sections 2.2 and 2.3,
StrikeForce Technologies will issue to Xxxxxxx.xxx options to purchase
seven million six hundred thousand shares (7,600,000) shares of the
common stock of StrikeForce Technologies at a price of thirty-six
cents ($0.36) per share. The options shall vest according to the
schedule attached as Schedule A and shall expire on August 31st, 2013.
The options shall be issued under a form of option agreement attached
hereto as Schedule B.
3. It is understood and agreed (a) that neither the options nor the
common stock to be issued upon exercise of the options have been
registered with the Securities and Exchange Commission or any state
securities regulatory agency and that, accordingly, such options may
not be resold except in one or more transactions that are exempt from
any state or federal registration requirements or pursuant to an
effective registration statement and (b) that no registration rights
are being granted as part of the issuance of the options. StrikeForce
Technologies shall provide its reasonable cooperation in the event
that Xxxxxxx.xxx seeks to resell such securities pursuant to an
exemption available under Section 4(2) of the Securities Act of 1933
or Rule 144 thereunder, provided that such resale complies with all
applicable law and Xxxxxxx.xxx pays all costs and fees incurred by
StrikeForce Technologies. Xxxxxxx.xxx covenants that it will not
resell any securities issued by StrikeForce Technologies pursuant to
this amendment in such a manner that StrikeForce Technologies will be
deemed an underwriter of the transaction.
4. This Amendment No. 2 to the Asset Purchase Agreement shall be
effective as of the date of September 11,2003.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be executed
this Amendment as of December 2nd, 2004.
StrikeForce Technologies, Inc. Xxxxxxx.xxx, Inc.
By: Xxxx X. Xxx By: Xxxxxx Xxxx
-------------- --------------
Print Name Print Name
/s/Xxxx X. Xxx /s/Xxxxxx Xxxx
-------------- --------------
Signature Signature
CEO President
-------------- --------------
Title Title
NEITHER THIS OPTION NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED
UNTIL (I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE
STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II)
THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER. STRIKEFORCE TECHNOLOGIES, INC.
STOCK OPTION
7,600,000 shares
Original Issue Date: As of September 11, 2003
THIS CERTIFIES THAT, FOR VALUE RECEIVED, XXXXXXX.XXX, INC. or its
registered assigns ("Holder") is entitled to purchase from STRIKEFORCE
TECHNOLOGIES, INC. (the "Company"), on the terms and conditions hereinafter set
forth, at any time or from time to time from the date hereof until 5:00 p.m.,
Eastern Time, on August 11, 2013, or if such date is not a day on which the
Company is open for business, then the next succeeding day on which the Company
is open for business (such date is the "Expiration Date"), but not thereafter,
to purchase up to SEVEN MILLION SIX HUNDRED THOUSAND (7,600,000) shares of the
Common Stock, par value $.0005 per share, (the "Common Stock"), of the Company,
at $0.36 per share (the "Exercise Price"), which such shares shall vest
according to Schedule I attached hereto, and such number of shares and Exercise
Price being subject to adjustment upon the occurrence of the contingencies set
forth in this Option. Each share of Common Stock as to which this Option is
exercisable is an "Option Share" and all such shares are collectively referred
to as the "Option Shares."
Section 1. Exercise of Option; Conversion of Option.
(a) This Option may, at the option of Holder, be exercised in
whole or in part from time to time by delivery to the Company at its office at
0000 Xxxx Xxxxxx'x Xxxx Xxxx, Xxxxxx, XX 00000 FAX: (000) 000-0000, Attention:
Secretary, on or before 5:00 p.m., Eastern Time, on the Expiration Date, (i) a
written notice of such Holder's election to exercise this Option (the "Exercise
Notice"), which notice may be in the form of the Notice of Exercise attached
hereto, properly executed and completed by Holder or an authorized officer
thereof, (ii) a check payable to the order of the Company, in an amount equal to
the product of the Exercise Price multiplied by the number of Option Shares
specified in the Exercise Notice, and (iii) this Option (the items specified in
(i), (ii), and (iii) are collectively the "Exercise Materials").
(b) This Option may, at the option of Holder, be converted into
Common Stock, if and only if the Average Market Price of one share of Common
Stock on the Effective Date (as defined in Section 1(d) hereof) is greater than
the Exercise Price, by delivery to the Company at the address designated in
Section 1(a) above or to any transfer agent for the Common Stock, on or before
5:00 p.m. Eastern Time on the Expiration Date, (i) a written notice of Holder's
election to convert this Option (the "Conversion Notice"), properly executed and
completed by Holder or an authorized officer thereof, and (ii) this Option (the
items specified in (i) and (ii) are collectively the "Conversion Materials").
The number of shares of Common Stock issuable upon conversion of this Option is
equal to the quotient of (x) the product of the number of Option Shares then
issuable upon exercise of this Option (assuming an exercise for cash, however
cashless is allowed) multiplied by the difference between (A) the Average Market
Price on the Effective Date minus (B) the then effective Exercise Price divided
by (y) the Average Market Price on the Effective Date. As used herein, "Average
Market Price" on any particular date means the arithmetic mean of the Closing
Bid Prices (as defined below) for the Common Stock for each trading day in the
five (5) trading day period ending on the trading day immediately preceding the
date on which the calculation is to be made. As used herein, "Closing Bid Price"
means, the last closing bid price of the Common Stock during regular trading
hours on the OTC Bulletin Board (the "OTCBB") or the Nasdaq Stock Market
("Nasdaq") as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the
OTCBB or Nasdaq is not the principal trading market for the Common Stock, the
last closing bid price during regular trading hours of the Common Stock on the
principal securities exchange or trading market where the Common Stock is listed
or traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price of the Common Stock in the over-the-counter market on the pink
sheets or bulletin board for the Common Stock as reported by Bloomberg, or, if
no closing bid price is reported for the Common Stock by Bloomberg, the last
closing trade price of the Common Stock as reported by Bloomberg. If the Closing
Bid Price cannot be calculated for the Common Stock on such date on any of the
foregoing bases, the Closing Bid Price of the Common Stock on such date shall be
the fair market value as reasonably determined in good faith by the Board of
Directors of the Company (all as appropriately adjusted for any stock dividend,
stock split, or other similar transaction during such period).
(c) As promptly as practicable, and in any event within two (2)
business days after its receipt of the Exercise Materials or the Conversion
Materials, Company shall execute or cause to be executed and delivered to Holder
a certificate or certificates representing the number of Option Shares specified
in the Exercise Notice or Conversion Notice, together with cash in lieu of any
fraction of a share, and if this Option is partially exercised, a new option on
the same terms for the unexercised balance of the Option Shares. The stock
certificate or certificates shall be registered in the name of Holder or such
other name or names as shall be designated in the Exercise Notice. The date on
which the Option shall be deemed to have been exercised (the "Effective Date"),
and the date the person in whose name any certificate evidencing the Common
Stock issued upon the exercise hereof is issued shall be deemed to have become
the holder of record of such shares, shall be the date the Company receives the
Exercise Materials or Conversion Materials, irrespective of the date of delivery
of a certificate or certificates evidencing the Common Stock issued upon the
exercise or conversion hereof, provided, however, that if the Exercise Materials
or Conversion Materials are received by the Company on a date on which the stock
transfer books of the Company are closed, the Effective Date shall be the next
succeeding date on which the stock transfer books are open. All shares of Common
Stock issued upon the exercise or conversion of this Option will, upon issuance,
be fully paid and non-assessable and free from all taxes, liens, and charges
with respect thereto.
Section 2. Adjustments to Option Shares. The number of Option Shares
issuable upon the exercise hereof shall be subject to adjustment as follows:
(a) In the event the Company is a party to a consolidation, share
exchange, or merger, or the sale of all or substantially all of the assets of
the Company to, any person, or in the case of any consolidation or merger of
another corporation into the Company in which the Company is the surviving
corporation, and in which there is a reclassification or change of the shares of
Common Stock of the Company, this Option shall after such consolidation, share
exchange, merger, or sale be exercisable for the kind and number of securities
or amount and kind of property of the Company or the corporation or other entity
resulting from such share exchange, merger, or consolidation, or to which such
sale shall be made, as the case may be (the "Successor Company"), to which a
holder of the number of shares of Common Stock deliverable upon the exercise
(immediately prior to the time of such consolidation, share exchange, merger, or
sale) of this Option would have been entitled upon such consolidation, share
exchange, merger, or sale; and in any such case appropriate adjustments shall be
made in the application of the provisions set forth herein with respect to the
rights and interests of Holder, such that the provisions set forth herein shall
thereafter correspondingly be made applicable, as nearly as may reasonably be,
in relation to the number and kind of securities or the type and amount of
property thereafter deliverable upon the exercise of this Option. The above
provisions shall similarly apply to successive consolidations, share exchanges,
mergers, and sales. Any adjustment required by this Section 2 (a) because of a
consolidation, share exchange, merger, or sale shall be set forth in an
undertaking delivered to Holder and executed by the Successor Company which
provides that Holder shall have the right to exercise this Option for the kind
and number of securities or amount and kind of property of the Successor Company
or to which the holder of a number of shares of Common Stock deliverable upon
exercise (immediately prior to the time of such consolidation, share exchange,
merger, or sale) of this Option would have been entitled upon such
consolidation, share exchange, merger, or sale. Such undertaking shall also
provide for future adjustments to the number of Option Shares and the Exercise
Price in accordance with the provisions set forth in Section 2 hereof.
(b) In the event the Company should at any time, or from time to
time after the Original Issue Date, fix a record date for the effectuation of a
stock split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock, or securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration (Cashless
Exercise) by such holder for the additional shares of Common Stock or the Common
Stock Equivalents (including the additional shares of Common Stock issuable upon
exercise or exercise thereof), then, as of such record date (or the date of such
dividend, distribution, split, or subdivision if no record date is fixed), the
number of Option Shares issuable upon the exercise hereof shall be
proportionately increased and the Exercise Price shall be appropriately
decreased by the same proportion as the increase in the number of outstanding
Common Stock Equivalents of the Company resulting from the dividend,
distribution, split, or subdivision. Notwithstanding the preceding sentence, no
adjustment shall be made to decrease the Exercise Price below $.001 per Share.
(c) In the event the Company should at any time or from time to
time after the Original Issue Date, fix a record date for the effectuation of a
reverse stock split, or a transaction having a similar effect on the number of
outstanding shares of Common Stock of the Company, then, as of such record date
(or the date of such reverse stock split or similar transaction if no record
date is fixed), the number of Option Shares issuable upon the exercise hereof
shall be proportionately decreased and the Exercise Price shall be appropriately
increased by the same proportion as the decrease of the number of outstanding
Common Stock Equivalents resulting from the reverse stock split or similar
transaction.
(d) In the event the Company should at any time or from time to
time after the Original Issue Date, fix a record date for a reclassification of
its Common Stock, then, as of such record date (or the date of the
reclassification if no record date is set), this Option shall thereafter be
convertible into such number and kind of securities as would have been issuable
as the result of such reclassification to a holder of a number of shares of
Common Stock equal to the number of Option Shares issuable upon exercise of this
Option immediately prior to such reclassification, and the Exercise Price shall
be unchanged.
(e) The Company will not, by amendment of its Certificate of
Incorporation or through reorganization, consolidation, merger, dissolution,
issue, or sale of securities, sale of assets or any other voluntary action, void
or seek to avoid the observance or performance of any of the terms of the
Option, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of Holder against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (x)
will not create a par value of any share of stock receivable upon the exercise
of the Option above the amount payable therefor upon such exercise, and (y) will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable shares upon
the exercise of the Option.
(f) When any adjustment is required to be made in the number or
kind of shares purchasable upon exercise of the Option, or in the Exercise
Price, the Company shall promptly notify Holder of such event and of the number
of shares of Common Stock or other securities or property thereafter purchasable
upon exercise of the Options and of the Exercise Price, together with the
computation resulting in such adjustment.
(g) The Company covenants and agrees that all Option Shares which
may be issued will, upon issuance, be validly issued, fully paid, and
non-assessable. The Company further covenants and agrees that the Company will
at all times have authorized and reserved, free from preemptive rights, a
sufficient number of shares of its Common Stock to provide for the exercise of
the Option in full.
Section 3. No Stockholder Rights. This Option shall not entitle Holder
hereof to any voting rights or other rights as a stockholder of the Company.
Section 4. Transfer of Securities.
(a) This Option and the Option Shares and any shares of capital
stock received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon, or otherwise, shall not be
transferable except upon compliance with the provisions of the Securities Act of
1933, as amended (the "Securities Act") and applicable state securities laws
with respect to the transfer of such securities. The Holder, by acceptance of
this Option, agrees to be bound by the provisions of Section 4 hereof and to
indemnify and hold harmless the Company against any loss or liability arising
from the disposition of this Option or the Option Shares issuable upon exercise
hereof or any interest in either thereof in violation of the provisions of this
Option.
(b) Each certificate for the Option Shares and any shares of
capital stock received in respect thereof, whether by reason of a stock split or
share reclassification thereof, a stock dividend thereon or otherwise, and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall (unless otherwise permitted by the provisions hereof) be
stamped or otherwise imprinted with a legend in substantially the following
form:
"NEITHER THIS OPTION NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND NEITHER MAY BE
SOLD OR OTHERWISE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER
SUCH SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) THE COMPANY SHALL
HAVE RECEIVED A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES ACT AND SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED TRANSFER."
4
Section 5. Miscellaneous.
(a) The terms of this Option shall be binding upon and shall
inure to the benefit of any successors or permitted assigns of the Company and
Holder.
(b) Except as otherwise provided herein, this Option and all
rights hereunder are transferable by the registered holder hereof in person or
by duly authorized attorney on the books of the Company upon surrender of this
Option, properly endorsed, to the Company. The Company may deem and treat the
registered holder of this Option at any time as the absolute owner hereof for
all purposes and shall not be affected by any notice to the contrary.
(c) Notwithstanding any provision herein to the contrary, Holder
may not exercise, sell, transfer, or otherwise assign this Option unless the
Company is provided with an opinion of counsel satisfactory in form and
substance to the Company, to the effect that such exercise, sale, transfer, or
assignment would not violate the Securities Act or applicable state securities
laws.
(d) This Option may be divided into separate options covering one
share of Common Stock or any whole multiple thereof, for the total number of
shares of Common Stock then subject to this Option at any time, or from time to
time, upon the request of the registered holder of this Option and the surrender
of the same to the Company for such purpose. Such subdivided Options shall be
issued promptly by the Company following any such request and shall be of the
same form and tenor as this Option, except for any requested change in the name
of the registered holder stated herein.
(e) Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Option must be in
writing and will be deemed to have been delivered (a) upon receipt, when
delivered personally, (b) upon receipt, when sent by facsimile, provided a copy
is mailed by U.S. certified mail, return receipt requested, (c) three (3) days
after being sent by U.S. certified mail, return receipt requested, or (d) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be: If to Company:
StrikeForce Technologies, Inc. 0000 Xxxx Xxxxxx'x Xxxx Xxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Holder, to the registered address of Holder appearing on
the books of the Company. Each party shall provide five (5) days prior written
notice to the other party of any change in address, which change shall not be
effective until actual receipt thereof
(f) The corporate laws of the state under which the Company, or
any successor of the Company, is organized shall govern all issues concerning
the relative rights of the Company and its stockholders. If any provision of
this Option shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Option in that jurisdiction or the validity or
enforceability of any provision of this Option in any other jurisdiction.
5
[Signatures on the following page]
6
SIGNATURE PAGE
TO
COMPANY
STOCK OPTION
IN WITNESS WHEREOF, the Company, has caused this Option to be executed
in its name by its duly authorized officers under seal, and to be dated as of
the date first above written.
STRIKEFORCE TECHNOLOGIES, INC.
By:/S/ Xxxx X. Xxx
--------------------------
Name: Xxxx X. Xxx
Title: CEO
ATTEST:
Secretary/Assistant Secretary
7
SCHEDULE I
------------------------------------ -------------------------------------------
Number of Shares Date of Vest
------------------------------------ -------------------------------------------
2,530,000 September 11th, 2004
------------------------------------ -------------------------------------------
2,530,000 September 11th, 2005
------------------------------------ -------------------------------------------
2,540,000 September 11th, 2006
------------------------------------ -------------------------------------------
8
ASSIGNMENT
(To be Executed by the Registered Holder to affect a
Transfer of the foregoing Option)
FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and
transfers unto
___________________________________________________________________________ the
foregoing Option and the rights represented thereto to purchase shares of Common
Stock of StrikeForce Technologies, Inc. in accordance with terms and conditions
thereof, and does hereby irrevocably constitute and appoint ________________
Attorney to transfer the said Option on the books of the Company, with full
power of substitution.
Holder:
Address
Dated: __________________, 2___
In the presence of:
-------------------------------
9
EXERCISE or conversion notice
[To be signed only upon exercise of Option]
To: STRIKEFORCE TECHNOLOGIES, INC.
The undersigned Holder of the attached Option hereby irrevocably
elects to exercise the Option for, and to purchase thereunder, _____ shares of
Common Stock of STRIKEFORCE TECHNOLOGIES, INC., issuable upon exercise of said
Option and hereby surrenders said Option.
Choose One:
The Holder herewith delivers to STRIKEFORCE TECHNOLOGIES, INC., a
check in the amount of $______ representing the Exercise Price for
such shares.
or
The Holder elects a cashless exercise pursuant to Section 2(b) of the
Option. The Average Market Price as of _______ was $-----.
The undersigned herewith requests that the certificates for such
shares be issued in the name of, and delivered to the undersigned, whose address
is ________________________________.
If electronic book entry transfer, complete the following:
Account Number:
-----------------------------------
Transaction Code Number:
------------------
Dated: ___________________
Holder:
------------------------------------
------------------------------------
By:
---------------------------------
Name:
Title:
NOTICE
The signature above must correspond to the name as written upon the
face of the within Option in every particular, without alteration or enlargement
or any change whatsoever.
10
COMPANY ACKNOWLEDGEMENT
TO
CONVERSION OR EXERCISE NOTICE
ACKNOWLEDGED AND AGREED:
STRIKEFORCE TECHNOLOGIES, INC.
