-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FhxAWAvIiggjHvEdjolYVCj4H9tKa0sQCMnKQ6kklcqTadpOZRpLu73aYBCpRV09 vi80iBeJweZ3Vj+VN5j9TA== 0001193125-04-155697.txt : 20040913 0001193125-04-155697.hdr.sgml : 20040913 20040913164318 ACCESSION NUMBER: 0001193125-04-155697 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20040913 DATE AS OF CHANGE: 20040913 GROUP MEMBERS: R. ALLEN STANFORD FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: STANFORD VENTURE CAPITAL HOLDINGS INC CENTRAL INDEX KEY: 0001160414 IRS NUMBER: 760619955 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 201 S BISCAYNE BLVD SUITE 1200 CITY: MIAMI STATE: FL ZIP: 33131 BUSINESS PHONE: 3053479102 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: STRONGHOLD TECHNOLOGIES INC CENTRAL INDEX KEY: 0001133598 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 22376235 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-79989 FILM NUMBER: 041027896 BUSINESS ADDRESS: STREET 1: 777 TERRACE AVE CITY: HASBROUCK HEIGHTS STATE: NJ ZIP: 07604 BUSINESS PHONE: 2017271464 MAIL ADDRESS: STREET 1: 777 TERRACE AVE CITY: HASBROUCK HEIGHTS STATE: NJ ZIP: 07604 FORMER COMPANY: FORMER CONFORMED NAME: TDT DEVELOPMENT INC DATE OF NAME CHANGE: 20010201 SC 13D/A 1 dsc13da.htm SCHEDULE 13D - AMENDMENT #4 Schedule 13D - Amendment #4

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D

(Amendment No. 4)

 

 

Under the Securities Exchange Act of 1934

 

 

 

 

Stronghold Technologies, Inc.


(Name of Issuer)

 

 

Common Stock


(Title of Class of Securities)

 

 

82773R 20 2


(CUSIP Number)

 

 

Stanford Venture Capital Holdings, Inc.

5050 Westheimer Road

Houston, Texas 77056

Attention: P. Mauricio Alvarado, Esq.

Telephone No.: (713) 964-5100


(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

 

 

June 16, 2004


(Date of Event which Requires Filing of this Statement)

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box.  ¨

 

*   The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

 

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


SCHEDULE 13D

CUSIP No. 82773R 20 2

 

 

Page 1 of 5 Pages

 

 

  1  

NAME OF REPORTING PERSONS/I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)

 

            Stanford Venture Capital Holdings, Inc.

   
  2  

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP

(a):  ¨

(b):  ¨

   
  3  

SEC USE ONLY

 

   
  4  

SOURCE OF FUNDS

 

            WC

   
  5  

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

 

  ¨
  6  

CITIZENSHIP OR PLACE OF ORGANIZATION

 

            Delaware

   

 

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

 

  7    SOLE VOTING POWER

 

                7,336,425/1/


  8    SHARED VOTING POWER

 

                0


  9    SOLE DISPOSITIVE POWER

 

                7,336,425/1/


10    SHARED DISPOSITIVE POWER

 

                0

11  

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

 

            7,336,425/1/

   
12  

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

 

¨

 

13  

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

 

            54.6%

   
14  

TYPE OF REPORTING PERSON

 

            CO

   

 

1 Includes 2,002,750 shares of Series A Preferred Stock, 2,444,444 shares of Series B Preferred Stock, 1,889,231 shares of Common Stock, and warrants to acquire 1,000,000 shares of Common Stock. The Series A Preferred Stock and the Series B Preferred Stock are convertible into Common Stock on a one-for-one basis.


SCHEDULE 13D

CUSIP No. 82773R 20 2   Page 2 of 5 Pages

 

  1  

NAME OF REPORTING PERSONS/I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)

 

            R. Allen Stanford

   
  2  

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP

(a):  ¨

(b):  ¨

   
  3  

SEC USE ONLY

 

   
  4  

SOURCE OF FUNDS

 

            AF

   
  5  

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)

 

  ¨
  6  

CITIZENSHIP OR PLACE OF ORGANIZATION

 

            Delaware and Antigua

   

NUMBER OF

SHARES

BENEFICIALLY

OWNED BY

EACH

REPORTING

PERSON

WITH

 

  7    SOLE VOTING POWER

 

                7,336,425/1/


  8    SHARED VOTING POWER

 

                0


  9    SOLE DISPOSITIVE POWER

 

                7,336,425/1/


10    SHARED DISPOSITIVE POWER

 

                0

11  

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

 

            7,336,425 shares of Common Stock /1/

   
12  

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

 

 

¨

 

13  

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

 

            54.6%

   
14  

TYPE OF REPORTING PERSON

 

            IN

   

 

1 Includes 2,002,750 shares of Series A Preferred Stock, 2,444,444 shares of Series B Preferred Stock, 1,889,231 shares of Common Stock, and warrants to acquire 1,000,000 shares of Common Stock. The Series A Preferred Stock and the Series B Preferred Stock are convertible into Common Stock on a one-for-one basis.


SCHEDULE 13D

CUSIP No. 82773R 20 2   Page 3 of 5 Pages

 

Introductory Statement

 

This Amendment No. 4 relates to the Schedule 13D filed on behalf of Stanford Venture Capital Holdings, Inc., a Delaware corporation (“SVCH”), and R. Allen Stanford (“Stanford”) (SVCH and Stanford are sometimes collectively referred to herein as the “Reporting Persons”), relating to the beneficial ownership of shares of common stock par value $.0001 per share (“Common Stock”) of Stronghold Technologies, Inc., a Nevada corporation (the “Issuer”). This Amendment No. 4 also reports SVCH and Stanford’s ownership of (i) Series A Convertible Preferred Stock (“Series A Preferred Stock” or “Preferred Stock”), which is convertible into shares of Common Stock, (ii) Series B Convertible Preferred Stock (“Series B Preferred Stock”), which is convertible into shares of Common Stock, and (iii) warrants (“Warrants”) to acquire shares of Common Stock. As described in this Schedule 13D, Stanford is joining SVCH in filing this Schedule 13D because, as the sole shareholder of SVCH, Stanford may be deemed to indirectly beneficially own the shares of Common Stock that are directly beneficially owned by SVCH. This Amendment No. 4 amends the Schedule 13D filed with the Securities and Exchange Commission on August 13, 2004, and more specifically amends Items 3 and 5 of the Statement of Schedule 13D previously filed by the Reporting Persons on such date.

 

Item 3. Source and Amount of Funds or Other Consideration.

 

Pursuant to a Note Purchase Agreement (“Note Purchase Agreement”) dated June 16, 2004, SVCH extended a loan to the Issuer in the amount of $875,000 as evidenced by the Issuer’s Consolidated 8% Promissory Note dated June 16, 2004 (the “June 2004 Note”) in exchange for certain existing indebtedness between SVCH and the Company and the transfer by Christopher J. Carey and Mary Carey of 875,000 shares of the Issuer’s common stock beneficially owned by them to SVCH. Under the Note Purchase Agreement, SVCH also received a warrant (“Warrant”) to purchase 2,000,000 shares of Issuer’s common stock at an exercise price of $0.001 per share. The Warrant is immediately exercisable and expires on June 15, 2009. Simultaneous with the closing, the Company transferred Warrants to purchase 1,000,000 shares of Common Stock to certain employees of SVCH pursuant to a Warrant Assignment and Joinder Agreement dated June 16, 2004.

 

Item 5. Interest in Securities of the Issuer.

 

a. As of June 16, 2004, the Reporting Persons directly own 2,002,750 shares of Series A Preferred Stock, 2,444,444 shares of Series B Preferred Stock, Warrants to purchase 1,000,000 shares of Common Stock and 1,889,231 shares of Common Stock. The Reporting Persons are deemed to beneficially own 7,336,425 shares of Common Stock or 54.6% of the Issuer’s issued and outstanding Common Stock. SVCH directly beneficially owns all the shares of Common Stock to which this Schedule 13D relates. Stanford, as the sole shareholder of SVCH, could be deemed to have indirect beneficial ownership of the shares of Common Stock directly beneficially owned by SVCH.

 

b. SVCH, together with Stanford, has the sole power to vote or direct the vote and the sole power to dispose or to direct the disposition of the shares of Preferred Stock, the Series B Preferred Stock, and Warrants reported as beneficially owned by it in Item 5(a) hereof.

 

c. The Reporting Persons’ only transaction in shares of Common Stock and Preferred Stock, respectively, during the past 60 days was the consummation of the transactions under the Securities Purchase Agreement.

 

d. Not applicable.


SCHEDULE 13D

CUSIP No. 82773R 20 2   Page 4 of 5 Pages

 

Item 6. Material to be Filed as Exhibits

 

3.1   Note Purchase Agreement dated as of June 16, 2004, by and between the Issuer, the Careys and SVCH.
3.2   Amended Registration Rights Agreement dated as of June 16, 2004 by and between the Issuer and SVCH.
3.3   Warrant Assignment and Joinder Agreement dated June 16, 2004 by and between SVCH, Daniel T. Bogar, Osvaldo Pi, Ronald M. Stein and William R. Fusselmann.
3.4   Warrant Agreement dated June 16, 2004 by and between the SVCH and the Issuer.
3.5   Joint Filing Agreement dated as of August 13, 2004 by and between SVCH and Stanford (previously filed).


SCHEDULE 13D

CUSIP No. 82773R 20 2   Page 5 of 5 Pages

 

SIGNATURES

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

September 13, 2004

     

/s/ R. Allen Stanford


        R. Allen Stanford
       

/s/ James M. Davis


        James M. Davis, President
        Stanford Venture Capital Holdings, Inc.


Exhibit Index

 

Exhibit No.

 

Description


3.1   Note Purchase Agreement dated as of June 16, 2004, by and between the Issuer, the Careys and SVCH.
3.2   Amended Registration Rights Agreement dated as of June 16, 2004 by and between the Issuer and SVCH.
3.3   Warrant Assignment and Joinder Agreement dated June 16, 2004 by and between SVCH, Daniel T. Bogar, Osvaldo Pi., Ronald M. Stein and William R. Fusselmann.
3.4   Warrant Agreement dated June 16, 2004 by and between the SVCH and the Issuer.
EX-3.1 2 dex31.htm NOTE PURCHASE AGREEMENT Note Purchase Agreement

Exhibit 3.1

 

NOTE PURCHASE AGREEMENT

 

THIS NOTE PURCHASE AGREEMENT (the “Agreement”) is made effective as of June 16, 2004, (the “Effective Date”) by and between STRONGHOLD TECHNOLOGIES, INC., a Nevada corporation (the “Company”); CHRISTOPHER J. CAREY and MARY CAREY (collectively, the “Careys”); and STANFORD VENTURE CAPITAL HOLDINGS, INC., a Delaware corporation (the “Purchaser”).

 

WHEREAS, the Purchaser has made a loan to the Company in the aggregate sum of Eight Hundred Seventy Five Thousand Dollars ($875,000) (the “Loan”) pursuant to that certain Promissory Note dated March 3, 2004, in the original principal amount of Four Hundred Thirty-Seven Thousand Dollars ($437,500) (the “First Interim Note”) and that certain Promissory Note dated March, 15, 2004, in the original principal amount of Four Hundred Thirty-Seven Thousand Dollars ($437,500) (the “Second Interim Note” and, together with the First Interim Note, the “Interim Notes”); and

 

WHEREAS, the Careys, individually or jointly, beneficially own the 6,006,250 shares (the “Carey Shares”) of the Company’s common stock, $.0001 par value per share (the “Stronghold Common Stock”); and

 

WHEREAS, the Company has agreed to issue to the Purchaser the Company’s Series A Consolidated 8% Promissory Note, in the original principal amount of Eight Hundred Seventy Five Thousand Dollars ($875,000), in the form of Exhibit A hereto (the “June 2004 Note”), in substitution for the Interim Notes; and

 

WHEREAS, in connection with the issuance of the June 2004 Note by the Company: (i) the Careys have agreed to transfer 875,000 shares of Stronghold Common Stock (the “Transferred Shares”) to the Purchaser or its designees as additional consideration for the Loan and (ii) the Company has agreed to grant the Purchaser or its designees a warrant in the form of Exhibit B hereto (the “Warrant”) to purchase 2,000,000 shares of Stronghold Common Stock (the “Warrant Shares”) at an exercise price of $0.001 per share; and

 

WHEREAS, Purchaser desires to acquire the June 2004 Note from the Company in substitution for the Interim Notes, the Transferred Shares from the Careys and the Warrant from the Company, all on the terms and conditions more specifically set forth herein.


NOW, THEREFORE, in consideration of the mutual promises, covenants, representations, and warranties set forth herein and for other good and valuable consideration, the parties hereto agree as follows:

 

Section 1. Substitution of June 2004 Note for Interim Notes and Transfer of Transferred Shares and Warrant.

 

(a) Note Substitution. Upon execution of this Agreement, the Purchaser agrees to acquire the June 2004 Note from the Company in exchange for the Interim Notes, the Company agrees to issue the June 2004 Note and the Warrant to the Purchaser or its designees in exchange for the Interim Notes, and the Careys agree to transfer the Transferred Shares to the Purchaser or its designees for the consideration specified in Paragraph 2(b) hereof.

 

(b) Consideration. In consideration for the transactions contemplated pursuant to this Agreement, Purchaser agrees to accept the June 2004 Note from the Company, mark the Interim Notes canceled, and deliver the canceled Interim Notes to the Company.

 

(c) Delivery. On the Effective Date: (i) the Company shall deliver the executed June 2004 Note and the executed Warrant to the Purchaser or its designees; (ii) the Careys shall deliver the Transferred Shares and such other documents and instruments necessary to transfer title in and to the Transferred Shares to the Purchaser or its designees; and (iii) the Purchaser shall deliver to the Company the cancelled Interim Notes.

 

(d) Amendment to Registration Rights Agreement. Upon the execution of the Agreement, the Company and Purchaser agree to enter into an amendment (the “Registration Rights Amendment”) to the Registration Rights Agreement between the Company and Purchaser dated as of May 16, 2002 (as amended, the “Registration Rights Agreement”), to cause the Warrant Shares issuable upon the exercise of the Warrants to be included under the applicable provisions of the Registration Rights Agreement.

 

Section 2. Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as follows:

 

(a) Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the Nevada and has all requisite corporate power and authority to carry on its businesses as now conducted and as proposed to be conducted.

 

(b) Corporate Power and Authority. The Company has all requisite corporate power necessary for the authorization, execution and delivery of this Agreement and the Registration Rights Amendment and the issuance of the June 2004 Note and the Warrant (this Agreement, the Registration Rights Amendment, the June 2004 Note and the Warrant sometimes collectively, the “Transaction Documents”). The Transaction Documents to which the Company is a party and the transactions contemplated hereby and thereby have been authorized by all necessary corporate action and, when executed and delivered by the Company, will constitute valid and legally binding obligations of the Company, enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors or other similar laws affecting creditors’ rights generally.

 

(c) Authorization and Issuance of Securities. The authorization, issuance and delivery of the Warrant and the Warrant Shares issuable upon exercise of the Warrant, have been duly

 

2


authorized by all requisite corporate action of the part of the Company and when paid for and issued in accordance with the terms of the Warrant, shall be duly and validly issued and outstanding, fully paid and non-assessable and not subject to any Transfer Restrictions (as hereinafter defined). The Company has reserved and available a sufficient number of authorized and unissued shares of Stronghold Common Stock as may be necessary to issue the Warrant Shares upon the exercise of the Warrants.

 

(d) No Consent. No consent, approval or authorization of or designation, declaration or filing, with any governmental authority or other third party is required in connection with the valid execution, delivery and performance of the Transaction Documents by the Company and the consummation of the transactions contemplated hereby and thereby other than any applicable filings in connection with exemptions for purposes of federal and/or state securities laws.

 

(e) Noncontravention. The execution and the delivery of the Transaction Documents to which the Company is a party and the consummation of the transactions contemplated hereby and thereby, shall not (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency or court to which the Company is subject, (ii) violate the Company’s Articles of Incorporation or Bylaws, or (iii) violate or result in a breach or constitute a default under the terms of any contract or agreement to which the Company is a party or is otherwise bound.

 

Section 3. Representations and Warranties of the Careys. The Careys, jointly and severally, represent and warrant to the Purchaser as follows:

 

(a) Authority for Agreement. The Careys each has full and absolute legal right, capacity, power and authority to enter into the Transaction Documents to which either of them is a party and to perform the transactions contemplated hereby and thereby. The Transaction Documents to which the Careys are parties constitute valid and binding obligations of the Careys, enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors or other similar laws affecting creditors’ rights generally.

 

(b) Ownership of Shares. The Transferred Shares are duly authorized, validly issued, fully paid and nonassessable, and the Careys owns all right, title and interest in and to the Transferred Shares, free and clear of all liens, pledges, security interests, claims, calls, options, rights of first refusal, pre-emptive rights, transfer restrictions under any shareholder or similar agreements, encumbrances or other restrictions or limitations (“Transfer Restrictions”). Upon the transfer of the Transferred Shares by the Careys to the Purchaser or its designees hereunder, the Purchaser or its designees shall receive good and marketable title to the Transferred Shares free and clear of all Transfer Restrictions.

 

(c) Noncontravention. The execution and the delivery of the Transaction Documents to which either of the Careys is a party, shall not (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency or court to which either of the Careys is subject or (ii) violate or result in a breach or constitute a default under the terms of any contract or agreement to which either of the Careys is a party or is otherwise bound.

 

3


Section 4. Representations and Warranties of Purchaser. Purchaser represents and warrants to the Company and the Careys as follows:

 

(a) Securities Laws. The Purchaser is an “Accredited Investor”, as defined in Rule 501(a) under the Securities Act of 1933 (the “Securities Act”). The Purchaser is acquiring the Warrant, the Warrant Shares and the Transferred Shares (the “Transaction Securities”) for its own account, for investment and not with a view to the distribution thereof within the meaning of the Securities Act. The Purchaser understands that the Transaction Securities have not been, or will not be registered the Securities Act or any state securities laws, and the Transaction Securities may not be sold, unless such disposition is registered pursuant to the Securities Act and applicable state securities laws or is exempt from registration thereunder. Purchaser further understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to Purchaser) promulgated under the Securities Act depends on the satisfaction of various conditions, and that, if applicable, Rule 144 may afford the basis for sales only in limited amounts or not at all.

 

(b) Organization, Authority, Corporate Power. The Purchaser is a corporation duly organized and validly existing under the laws of the state of Delaware and has all power and authority to enter into and perform the Transaction Documents to which it is a party. Each of the Transaction Documents to which the Purchaser is a party has been duly authorized by all necessary corporate action and constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors or other similar laws affecting creditors’ rights generally.

 

(c) No Consent. No consent, approval or authorization of or designation, declaration or filing with any governmental authority or other third party is required in connection with the valid execution, delivery and performance of the Transaction Documents to which the Purchaser is a party and the consummation of the transactions contemplated hereby and thereby other than any applicable filings in connection with exemptions for purposes of federal and/or state securities laws.

 

Section 5. Miscellaneous.

 

(a) Choice of Law and Venue; Submission to Jurisdiction; Service of Process.

 

(i) THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF). THE PARTIES

 

4


AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF MIAMI DADE, FLORIDA OR, AT THE SOLE OPTION OF THE PURCHASER, IN ANY OTHER COURT IN WHICH THE PURCHASER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY.

 

(ii) THE COMPANY AND THE CAREYS HEREBY SUBMIT FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY, TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT THEY MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.

 

(iii) COMPANY AND CAREY HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT, OR OTHER PROCESS ISSUED IN ANY ACTION OR PROCEEDING AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT, OR OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO EITHER PARTY AT ITS ADDRESS FOR NOTICES IN ACCORDANCE WITH THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ITS ACTUAL RECEIPT THEREOF OR FOUR DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.

 

(iv) NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF THE PURCHASER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY PURCHASER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

 

(b) Notices.

 

Unless otherwise specifically provided herein, all notices shall be in writing addressed to the respective party as set forth below: and may be personally served, faxed, telecopied or sent by overnight courier service or United States mail:

 

Company or Carey:

  

Stronghold Technologies, Inc.

    

106 Allen Road

    

Basking Ridge, NJ 07920

    

Attention:         Christopher J. Carey

    

Telephone:       (201) 727-1400

    

Facsimile:         (201) 288-9414

 

5


Purchaser:

   Stanford Venture Capital Holdings, Inc.
     6075 Poplar Avenue
     Memphis, TN 38119
     Attention:         James M. Davis, President
     Telephone:       (901) 680-5260
     Facsimile:         (901) 680-5265

 

Any notice given pursuant to this section shall be deemed to have been given: (a) if delivered in person, when delivered; (b) if delivered by fax, on the date of transmission if transmitted on a Business Day (as defined in the Pledge Agreement) before 4:00 p.m. at the place of receipt or, if not, on the next succeeding Business Day; (c) if delivered by overnight courier, two (2) days after delivery to such courier properly addressed; or (d) if by United States mail, four (4) Business Days after depositing in the United States mail, with postage prepaid and properly addressed. Any party hereto may change the address or fax number at which it is to receive notices hereunder by notice to the other party in writing in the foregoing manner.

 

(c) Survival. The representations, warranties, covenants and agreements made herein shall survive the closing of the transactions contemplated hereby.

 

(d) Successors and Assigns. Except as otherwise 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.

 

(e) Entire Agreement; Amendment. This Agreement with its exhibits, and related documents, such as the June 2004 Note and the Pledge Agreement, constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.

 

(f) Florida Corporate Securities Law. THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE BEEN TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT, THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, OR THE SECURITIES LAWS OF ANY OTHER STATE, PURSUANT TO APPLICABLE EXEMPTIONS FROM SUCH REGISTRATION. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME EXCEPT IN ACCORDANCE WITH AND PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT PURSUANT TO THE SECURITIES ACT AND SUCH FLORIDA AND OTHER STATE LAWS AS MAY BE APPLICABLE, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

(g) Expenses. On the Effective Date, the Company agrees to reimburse the Purchaser for all reasonable expenses, including legal fees up to $25,000 and Florida Documentary Stamp Tax, penalties and interest in the amount of $2,014.39 incurred as a result of the delivery of the

 

6


First Interim Note to the Purchaser in Florida, despite instructions to deliver the First Interim Note to the Purchaser in Tennessee, incurred on the Purchaser’s behalf with respect to the Transaction Documents and the transactions contemplated hereby.

 

(h) Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, the remaining provisions of this Agreement shall continue in full force and effect without such provision.

 

(i) Broker’s Fees. Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker’s or finder’s fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation of this section being untrue.

 

(j) Counterparts. This Agreement may be executed in counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

 

IN WITNESS WHEREOF, the Company, the Purchaser and the Careys have caused this Note Purchase Agreement to be duly executed and delivered as of the Effective Date first set forth above.

 

COMPANY:

  STRONGHOLD TECHNOLOGIES, INC.
    By:  

/s/ Christopher J. Carey


    Name:  

Christopher J. Carey

    Title:  

President

PURCHASER:

  STANFORD VENTURE CAPITAL HOLDINGS, INC.
    By:  

/s/ James M. Davis


    Name:  

James M. Davis

    Title:  

President and CEO

CAREY:

 

/s/ Christopher J. Carey


   

CHRISTOPHER J. CAREY, Individually

   

/s/ Mary Carey


   

MARY CAREY, Individually

 

7


EXHIBIT A

 

(Form of June 2004 Note)

 

8


EXHIBIT B

 

(Form of Warrant)

 

9

EX-3.2 3 dex32.htm AMENDMENT TO REGISTRATION RIGHTS AGREEMENT Amendment to Registration Rights Agreement

Exhibit 3.2

 

ADMENDMENT TO REGISTRATION RIGHTS AGREEMENT

 

THIS AMENDMENT TO REGISTRATION RIGHTS AGREEMENT, dated as of June 16, 2004 (the “Amendment”), is entered into by and between Stronghold Technologies, Inc., a Nevada corporation (the “Company”) and Stanford Venture Capital Holdings, Inc., a Delaware corporation (“Investor”). Capitalized terms not defined herein shall have the meanings ascribed to them in the Registration Rights Agreement (as hereinafter defined).

 

WHEREAS, the parties hereto entered into a Registration Rights Agreement dated as of May 16, 2002 (the “Registration Rights Agreement”) wherein the Company granted the Investor certain registration rights with respect to the Series A Preferred Stock and Warrants purchased by Investor under the Securities Purchase Agreement; and

 

WHEREAS, the Company and Investor entered into a Note Purchase Agreement dated of even date herewith, wherein the Company issued Investor or its designees a warrant (the “2004 Warrant”) to purchase 2,000,000 shares of Common Stock (the “2004 Warrant Shares”); and

 

WHEREAS, the parties desire to amend the Registration Rights Agreement to grant to Investor or its designees registration rights with respect to the 2004 Warrant Shares issuable upon exercise of the 2004 Warrants, as more specifically set forth herein.

 

NOW, THEREFORE, the parties hereto mutually agree as follows:

 

1. The Registration Rights Agreement is hereby amended in its entirety such that all references to the “Warrant Shares” contained therein shall include the 2004 Warrant Shares issuable upon the exercise of the 2004 Warrants and the 2004 Warrant Shares shall have the same rights as the Warrant Shares under the Registration Rights Agreement.

 

2. All other provisions of the Registration Rights Agreement shall remain in full force and effect; provided, however; in the event that there is a conflict between this Amendment and the Registration Rights Agreement, this Amendment shall control in all respects.

 

3. This Amendment shall inure to the benefit of, and be binding upon the successors and assigns of each of the parties hereto, including any transferees of the Securities.

 

[SIGNATURES ON FOLLOWING PAGE]


IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, on this 16th day of June, 2004.

 

STRONGHOLD TECHNOLOGIES, INC.
By:  

/s/ Christopher J. Carey


Name:   Christopher J. Carey
Title:   President
INVESTOR:
STANFORD VENTURE CAPITAL
HOLDINGS, INC.
By:  

/s/ James M. Davis


Name:   James M. Davis
Title:   President and CEO

/s/ Daniel To. Bogar


Daniel T. Bogar
1016 Sanibel Drive
Hollywood, FL 33019

/s/ Osvaldo Pi


Osvaldo Pi
6405 S.W. 104th Street
Pinecrest, FL 33156

/s/ Ronald M. Stein


Ronald M. Stein
6520 Allison Road
Miami Beach, FL 33141

/s/ William R. Fusselmann


William R. Fusselmann
141 Crandon Boulevard, #437
Key Biscayne, FL 33149

 

2

EX-3.3 4 dex33.htm WARRANT ASSIGNMENT AND JOINDER Warrant Assignment and Joinder

Exhibit 3.3

 

WARRANT ASSIGNMENT AND JOINDER

 

Reference is made to that certain Warrant, dated as of June 16, 2004 (the “Warrant”), to purchase in the aggregate 2,000,000 shares of the common stock, $.0001 par value per share (“Common Stock”), of Stronghold Technologies, Inc., a Nevada corporation (the “Company”). Capitalized terms not defined herein shall have the meaning given to them in the Note Purchase Agreement, dated as of June 16, 2004, by and among the Company, Stanford Venture Capital Holdings, Inc., a Delaware corporation (“Stanford”), Christopher J. Carey and Mary Carey.

 

Now therefore, for value received, Stanford (“Holder”), hereby sells, assigns and transfers unto (i) Daniel T. Bogar (“Bogar”) the right to purchase 250,000 shares of Common Stock represented by the Warrant (the “Bogar Warrant Shares”); (ii) William R. Fusselmann (“Fusselmann”) the right to purchase 250,000 shares of Common Stock represented by the Warrant (the “Fusselmann Warrant Shares”); (iii) Osvaldo Pi (“Pi”) the right to purchase 250,000 shares of Common Stock represented by the Warrant (the “Pi Warrant Shares”), and (iv) Ronald M. Stein (“Stein”) the right to purchase 250,000 shares of Common Stock represented by the Warrant (“Stein Warrant Shares”) (each of Bogar, Fusselmann, Pi and Stein, individually an “Assignee and collectively, the “Assignees” and the Bogar Warrant Shares, the Fusselmann Warrant Shares, the Pi Warrant Shares, and the Stein Warrant Shares, collectively the “Warrant Shares”).

 

By execution and delivery of this Warrant Assignment and Joinder, each Assignee, as successor to Holder with respect to its respective amount of the Warrant Shares (i) will be deemed to be a party to the Warrant and the Registration Rights Agreement, incorporated by this reference as though fully set forth herein, (ii) authorizes this Warrant Assignment and Joinder to be attached to the Warrant, and (iii) represents and warrants that Assignee is an Accredited Investor.

 

Each Assignee, as successor to Holder with respect to its respective amount of the Warrant Shares, will have all rights, and shall observe all the obligations, applicable to a “Holder” as set forth in the Warrant, an “Investor” as set forth in the Registration Rights Agreement, as though such Assignee had executed the Warrant and the Registration Rights Agreement as an initial Holder or Investor thereunder, and confirms his obligations under the Warrant and the Registration Rights Agreement.

 

Date: June 16, 2004

 

COMPANY   HOLDER
Stronghold Technologies, Inc.   Stanford Venture Capital Holdings, Inc.
By:  

/s/ Christopher J. Carey


  By:  

/s/ James M. Davis


Name:   Christopher J. Carey   Name:   James M. Davis
Title:   President   Title:   President and CEO


ASSIGNEES

/s/ Daniel T. Bogar


Daniel T. Bogar
1016 Sanibel Drive
Hollywood, FL 33019

/s/ William R. Fusselmann


William R. Fusselmann
141 Crandon Boulevard, #437
Key Biscayne, FL 33149

/s/ Osvaldo Pi


Osvaldo Pi
6405 S.W. 104th Street
Pinecrest, FL 33156

/s/ Ronald M. Stein


Ronald M. Stein
6520 Allison Road
Miami Beach, FL 33141
EX-3.4 5 dex34.htm WARRANT AGREEMENT BETWEEN SVCH AND THE ISSUER Warrant Agreement between SVCH and the Issuer

Exhibit 3.4

 

VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON JUNE 15, 2009. NEITHER THIS WARRANT NOR THE WARRANT STOCK (AS HEREINAFTER DEFINED) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT AND THE WARRANT STOCK MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE ACT AND SUCH LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT.

 

THIS WARRANT IS SUBJECT TO THE TERMS OF THE NOTE PURCHASE AGREEMENT, DATED OF EVEN DATE HEREWITH BETWEEN THE COMPANY, CHRISTOPHER J. CAREY, MARY CAREY AND THE HOLDER HEREOF, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY.

 

Warrant No.            

 

STRONGHOLD TECHNOLOGIES, INC.

(Incorporated under the laws of the State of Nevada)

 

Warrant

 

1,000,000 Shares   June 16, 2004

 

FOR VALUE RECEIVED, STRONGHOLD TECHNOLOGIES, INC, a Nevada corporation (the “Company”), hereby certifies that STANFORD VENTURE CAPITAL HOLDINGS, INC., a Delaware corporation (the “Holder”) is entitled, subject to the provisions of this Warrant, to purchase from the Company up to 1,000,000 shares of common stock (the “Common Shares”), par value $.0001 per share (“Common Stock”), of the Company at an exercise price equal to $0.001 per Common Share (the “Exercise Price”), during the period commencing June 16, 2004 and expiring at 5:00 P.M., New York City time, on June 15, 2009 (5 years from the date of issuance).

 

The number of Common Shares to be received upon the exercise of this Warrant may be adjusted from time to time as hereinafter set forth. The Common Shares deliverable upon such exercise, or the entitlement thereto upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as “Warrant Stock.” The Warrants issued on the same date hereof bearing the same terms and conditions as this Warrant shall be collectively referred to as the “Warrants.”


The Holder agrees with the Company that this Warrant is issued, and all the rights hereunder shall be held subject to, all of the conditions, limitations and provisions set forth herein.

 

1. EXERCISE OF WARRANT

 

By Payment of Cash. This Warrant may be exercised by its presentation and surrender to the Company at its principal office (or such office or agency of the Company as it may designate in writing to the Holder hereof), commencing on June 16, 2004 and expiring at 5:00 P.M., New York City time, on June 15, 2009 (5 years from the date of issuance), with the Warrant Exercise Form attached hereto duly executed and accompanied by payment (either in cash or by certified or official bank check or by wire transfer, payable to the order of the Company) of the Exercise Price for the number of shares specified in such Form.

 

The Company agrees that the Holder hereof shall be deemed the record owner of such Common Shares as of the close of business on the date on which this Warrant shall have been presented and payment made for such Common Shares as aforesaid whether or not the Company or its transfer agent is open for business. Certificates for the Common Shares so purchased shall be delivered to the Holder hereof within a reasonable time, not exceeding 15 days, after the rights represented by this Warrant shall have been so exercised. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder hereof to purchase the balance of the shares purchasable hereunder as soon as reasonably possible.

 

(a) Cashless Exercise. In lieu of the payment method set forth in Section 1(a) above, the Holder may elect to exchange all or some of this Warrant for the Common Shares equal to the value of the amount of this Warrant being exchanged on the date of exchange. If the Holder elects to exchange this Warrant as provided in this Section 1(b), the Holder shall tender to the Company this Warrant for the amount being exchanged, along with written notice of the Holder’s election to exchange some or all of this Warrant, and the Company shall issue to the Holder the number of Common Shares computed using the following formula:

 

X = Y (A-B)

      A

 

Where:   X =   The number of Common Shares to be issued to the Holder.
    Y =   The number of Common Shares purchasable under the amount of this Warrant being exchanged (as adjusted to the date of such calculation).
    A =   The Market Price of one Common Share.
    B =   The Exercise Price (as adjusted to the date of such calculation).

 

2


The Warrant exchange shall take place on the date specified in the notice or if the date the notice is received by the Company is later than the date specified in the notice, on the date the notice is received by the Company.

 

As used herein in the phrase “Market Price” at any date shall be deemed to be the last reported sale price or the closing price of the Common Stock on any exchange (including the National Association of Securities Dealers Automated Quotation System (“Nasdaq”)) on which the Common Stock is listed or the closing price as quoted on the OTC Bulletin Board, whichever is applicable, or, in the case no such reported sale takes place on such day, the average of the last reported sales prices or quotations for the last five trading days, in either case as officially reported or quoted by the principal securities exchange or the OTC Bulletin Board and if the Common Stock is not listed or quoted as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it.

 

(b) “Easy Sale” Exercise. In lieu of the payment method set forth in Section 1(a) above, when permitted by law and applicable regulations (including rules of Nasdaq and National Association of Securities Dealers (“NASD”)), the Holder may pay the aggregate Exercise Price (the “Exercise Amount”) through a “same day sale” commitment from the Holder (and if applicable a broker-dealer that is a member of the NASD (an “NASD Dealer”)), whereby the Holder irrevocably elects to exercise this Warrant and to sell a portion of the shares so purchased to pay the Exercise Amount and the Holder (or, if applicable, the NASD Dealer) commits upon sale (or, in the case of the NASD Dealer, upon receipt) of such shares to forward the Exercise Amount directly to the Company.

 

2. COVENANTS BY THE COMPANY

 

The Company covenants and agrees as follows:

 

(a) Reservation of Shares. During the period within which the rights represented by this Warrant may be exercised, the Company shall, at all times, reserve and keep available out of its authorized capital stock, solely for the purposes of issuance upon exercise of this Warrant, such number of its Common Shares as shall be issuable upon the exercise of this Warrant. If at any time the number of authorized Common Shares shall not be sufficient to effect the exercise of this Warrant, the Company will take such corporate action as may be necessary to increase its authorized but unissued Common Shares to such number of shares as shall be sufficient for such purpose. The Company shall have analogous obligations with respect to any other securities or property issuable upon exercise of this Warrant.

 

(b) Valid Issuance, etc. All Common Shares which may be issued upon exercise of the rights represented by this Warrant included herein will be, upon payment thereof, validly issued, fully paid, non-assessable and free from all taxes, liens and charges with respect to the issuance thereof.

 

(c) Taxes. All original issue taxes payable in respect of the issuance of Common Shares upon the exercise of the rights represented by this Warrant shall be borne by the Company, but in no event shall the Company be responsible or liable for income taxes or transfer taxes upon the issuance or transfer of this Warrant or the Warrant Stock.

 

3


(d) Fractional Shares. The Company shall not be required to issue certificates representing fractions of Common Shares. In lieu of any fractional interests, the Company shall make a cash payment equal to the Exercise Price multiplied by such fraction.

 

3. EXCHANGE OR ASSIGNMENT OF WARRANT

 

This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company for other Warrants of different denominations, entitling the Holder to purchase in the aggregate the same number of Common Shares purchasable hereunder. Subject to the provisions of this Warrant and the receipt by the Company of any required representations and agreements, upon surrender of this Warrant to the Company with the Warrant Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without additional charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. In the event of a partial assignment of this Warrant, the new Warrants issued to the assignee and the Holder shall make reference to the aggregate number of shares of Warrant Stock issuable upon exercise of this Warrant.

 

4. RIGHTS OF THE HOLDER

 

The Holder shall not, by virtue hereof, be entitled to any voting or other rights of a stockholder of the Company, either at law or in equity, and the rights of the Holder are limited to those expressed in this Warrant.

 

5. ADJUSTMENT OF EXERCISE PRICE

 

(a) Common Stock Dividends; Common Stock Splits; Reclassification. If the Company, at any time while this Warrant is outstanding, (a) shall pay a stock dividend on its Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares (or combine the outstanding shares of Common Stock into a smaller number of shares) or (c) issue by reclassification of shares of Common Stock any shares of capital stock of the Company, then (i) the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event and (ii) the number of shares of the Warrant Stock shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such event. Any adjustment made pursuant to this Section 5.1 shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution or, in the case of a subdivision or re-classification, shall become effective immediately after the effective date thereof.

 

(b) Rights; Options; Warrants or Other Securities. If the Company, at any time while this Warrant is outstanding, shall fix a record date for the issuance of rights, options, warrants or other securities to all the holders of its Common Stock entitling them to subscribe for or purchase, convert to, exchange for or otherwise acquire shares of Common Stock for no consideration or at a price per share less than the Exercise Price, the Exercise Price shall be

 

4


multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issuance or sale plus the number of shares of Common Stock which the aggregate consideration received by the Company would purchase at the Exercise Price, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issuance date plus the number of additional shares of Common Stock offered for subscription, purchase, conversion, exchange or acquisition, as the case may be. Such adjustment shall be made whenever such rights, options, warrants or other securities are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options, warrants or other securities.

 

(c) Subscription Rights. If the Company, at any time while this Warrant is outstanding, shall fix a record date for the distribution to holders of its Common Stock, evidence of its indebtedness or assets or rights, options, warrants or other security entitling them to subscribe for or purchase, convert to, exchange for or otherwise acquire any security (excluding those referred to in Sections 5(a) and 5(b) above), then in each such case the Exercise Price at which this Warrant shall thereafter be exercisable shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the per-share Market Price on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of Common Stock as determined by the Board of Directors in good faith, and the denominator of which shall be the Exercise Price as of such record date; provided, however, that in the event of a distribution exceeding 10% of the net assets of the Company, such fair market value shall be determined by an appraiser selected in good faith by the registered owners of a majority of the Warrant Stock then outstanding; and provided, further, that the Company, after receipt of the determination by such appraiser shall have the right to select in good faith an additional appraiser meeting the same qualifications, in which case the fair market value shall be equal to the average of the determinations by each such appraiser. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

(d) Rounding. All calculations under this Section 5 shall be made to the nearest cent or the nearest l/l00th of a share, as the case may be.

 

(e) Notice of Adjustment. Whenever the Exercise Price is adjusted pursuant to this Section 5, the Company shall promptly deliver to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Such notice shall be signed by the chairman, president or chief financial officer of the Company.

 

(f) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any shares so owned or held shall be considered an issue or sale of Common Stock by the Company.

 

5


(g) Change of Control; Compulsory Share Exchange. In case of (A) any Change of Control Transaction (as defined below) or (B) any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property (each, an “Event”), lawful provision shall be made so that the Holder shall have the right thereafter to exercise this Warrant for shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such Event, and the Holder shall be entitled upon such Event to receive such amount of shares of stock and other securities, cash or property as the shares of the Common Stock of the Company into which this Warrant could have been exercised immediately prior to such Event (without taking into account any limitations or restrictions on the exercisability of this Warrant) would have been entitled; provided, however, that in the case of a transaction specified in (A), above, in which holders of the Company’s Common Stock receive cash, the Holder shall have the right to exercise the Warrant for such number of shares of the surviving company equal to the amount of cash into which this Warrant is then exercisable, divided by the fair market value of the shares of the surviving company on the effective date of such Event. The terms of any such Event shall include such terms so as to continue to give to the Holder the right to receive the securities, cash or property set forth in this Section 5(g) upon any exercise or redemption following such Event, and, in the case of an Event specified in (A), above, the successor corporation or other entity (if other than the Company) resulting from such reorganization, merger or consolidation, or the person acquiring the properties and assets, or such other controlling corporation or entity as may be appropriate, shall expressly assume the obligation to deliver the securities or other assets which the Holder is entitled to receive hereunder. The provisions of this Section 5(g) shall similarly apply to successive Events. “Change of Control Transaction” means the occurrence of any (i) merger or consolidation of the Company with or into another entity, unless the holders of the Company’s securities immediately prior to such transaction or series of transactions continue to hold at least 50% of such securities following such transaction or series of transactions, (ii) a sale, conveyance, lease, transfer or disposition of all or substantially all of the assets of the Company in one or a series of related transactions or (iii) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (i) or (ii).

 

(h) Issuances Below Exercise Price. If the Company, at any time while this Warrant is outstanding:

 

(i) issues or sells, or is deemed to have issued or sold, any Common Stock;

 

(ii) in any manner grants, issues or sells any rights, options, warrants, options to subscribe for or to purchase Common Stock or any stock or other securities convertible into or exchangeable for Common Stock (other than any Excluded Securities (as defined below)) (such rights, options or warrants being herein called “Options” and such convertible or exchangeable stock or securities being herein called “Convertible Securities”); or

 

(iii) in any manner issues or sells any Convertible Securities;

 

for (a) with respect to paragraph (i) above, a price per share, or (b) with respect to paragraphs (ii) or (iii) above, a price per share for which Common Stock issuable upon the

 

6


exercise of such Options or upon conversion or exchange of such Convertible Securities is, less than the Exercise Price in effect immediately prior to such issuance or sale, then, immediately after such issuance, sale or grant, the Exercise Price shall be reduced to a price equal to the price per share of the Common Stock sold or the exercise price or conversion price of the Options and Convertible Securities, as applicable. No modification of the issuance terms shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Options or Convertible Securities. The number of Common Shares issuable upon exercise of this Warrant shall be increased to an amount equal to the quotient of (A) the product of (x) the Exercise Price in effect immediately prior to the adjustment multiplied by (y) the number of Common Shares issuable upon exercise of this Warrant immediately prior to the adjustment, divided by (B) the adjusted Exercise Price. If there is a change at any time in (i) the exercise price provided for in any Options, (ii) the additional consideration, if any, payable upon the issuance, conversion or exchange of any Convertible Securities or (iii) the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock, then immediately after such change the Exercise Price shall be adjusted to Exercise Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed exercise price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold; provided that no adjustment shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

Excluded Securities” means (i) options to be granted pursuant to a stock option plan approved by Holder; (ii) shares of Common Stock issued upon conversion or exercise of warrants, options or other securities convertible into Common Stock which have been specifically disclosed to Holder in the Securities Purchase Agreement dated May 16,2002 between the Company and Holder, or (iii) shares of Common Stock or securities convertible into or exercisable for shares of Common Stock issued or deemed to be issued by the Company in connection with a strategic acquisition by the Company of the assets or business, or division thereof, of another entity which acquisition has been approved by Holder in writing.

 

(i) Effect on Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section 5(h), the following shall be applicable:

 

(i) Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor, without deducting any expenses paid or incurred by the Company or any commissions or compensations paid or concessions or discounts allowed to underwriters, dealers or others performing similar services in connection with such issue or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities listed or quoted on a national securities exchange or national quotation system, in which case the amount of consideration received by the Company will be the arithmetic average of the closing sale price of such security for the five (5) consecutive trading days immediately preceding the date of receipt thereof. In case any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of

 

7


the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the registered owners of a majority of the Warrant Stock then outstanding. If such parties are unable to reach agreement within 10 days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within 48 hours of the 10th day following the Valuation Event by an appraiser selected in good faith by the Company and agreed upon in good faith by the registered owners of a majority of the Warrant Stock then outstanding. The determination of such appraiser shall be binding upon all parties absent manifest error.

 

(ii) Integrated Transactions. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for an aggregate consideration of $.001.

 

(iii) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (a) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (b) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

(iv) Other Events. If any event occurs that would adversely affect the rights of the Holder of this Warrant but is not expressly provided for by this Section 5 (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price so as to protect the rights of the Holder; provided, however, that no such adjustment will increase the Exercise Price.

 

(j) Notice of Certain Events. If:

 

(i) the Company shall declare a dividend (or any other distribution) on its Common Stock;

 

(ii) the Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock;

 

(iii) the Company shall authorize the granting to the holders of all of its Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights;

 

(iv) the approval of any stockholders of the Company shall be required in connection with any capital reorganization, reclassification of the Company’s capital stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or

 

8


(v) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;

 

then the Company shall cause to be filed at each office or agency maintained for the purpose of exercise of this Warrant, and shall cause to be delivered to the Holder, at least 30 calendar days prior to the applicable record or effective date hereinafter specified, a notice (provided such notice shall not include any material non-public information) stating (a) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (b) the date on which such reorganization, reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, transfer or share exchange; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. Nothing herein shall prohibit the Holder from exercising this Warrant during the 30-day period commencing on the date of such notice.

 

(k) Increase in Exercise Price. In no event shall any provision in this Section 5 cause the Exercise Price to be greater than the Exercise Price on the date of issuance of this Warrant, except for a combination of the outstanding shares of Common Stock into a smaller number of shares as referenced in Section 5(a) above.

 

6. RESTRICTIONS ON EXERCISE

 

(a) Investment Intent. Unless, prior to the exercise of the Warrant, the issuance of the Warrant Stock has been registered with the Securities and Exchange Commission pursuant to the Act, the Warrant Exercise Form shall be accompanied by a representation of the Holder to the Company to the effect that such shares are being acquired for investment and not with a view to the distribution thereof, and such other representations and documentation as may be required by the Company, unless in the opinion of counsel to the Company such representations or other documentation are not necessary to comply with the Act.

 

7. RESTRICTIONS ON TRANSFER

 

(a) Transfer to Comply with the Securities Act of 1933. Neither this Warrant nor any Warrant Stock may be sold, assigned, transferred or otherwise disposed of except as follows: (1) to a person who, in the opinion of counsel satisfactory to the Company, is a person to whom this Warrant or the Warrant Stock may legally be transferred without registration and without the delivery of a current prospectus under the Act with respect thereto and then only against receipt of an agreement of such person to comply with the provisions of this Section 7 with respect to any resale, assignment, transfer or other disposition of such securities; (2) to any person upon delivery of a prospectus then meeting the requirements of the Act relating to such securities and the offering thereof for such sale, assignment, transfer or disposition; or (3) to any “affiliate” (as such term is used in Rule 144 promulgated pursuant to the Act) of the Holder.

 

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(b) Legend. Subject to the terms hereof, upon exercise of this Warrant and the issuance of the Warrant Stock, all certificates representing such Warrant Stock shall bear on the face or reverse thereof substantially the following legend:

 

“The securities which are represented by this certificate have not been registered under the Securities Act of 1933, and may not be sold, transferred, hypothecated or otherwise disposed of until a registration statement with respect thereto is declared effective under such act, or the Company receives an opinion of counsel for the Company that an exemption from the registration requirements of such act is available.”

 

8. LOST, STOLEN OR DESTROYED WARRANTS

 

In the event that the Holder notifies the Company that this Warrant has been lost, stolen or destroyed and provides (a) a letter, in form reasonably satisfactory to the Company, to the effect that it will indemnify the Company from any loss incurred by it in connection therewith, and/or (b) an indemnity bond in such amount as is reasonably required by the Company, the Company having the option of electing either (a) or (b) or both, the Company may, in its sole discretion, accept such letter and/or indemnity bond in lieu of the surrender of this Warrant as required by Section 1 hereof.

 

9. SUBSEQUENT HOLDERS

 

Every Holder hereof, by accepting the same, agrees with any subsequent Holder hereof and with the Company that this Warrant and all rights hereunder are issued and shall be held subject to all of the terms, conditions, limitations and provisions set forth in this Warrant, and further agrees that the Company and its transfer agent, if any, may deem and treat the registered holder of this Warrant as the absolute owner hereof for all purposes and shall not be affected by any notice to the contrary.

 

10. NOTICES

 

Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission and mailing a copy of such confirmation, postage prepaid by certified mail, return receipt requested) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed the other party at the following address, or at such other addresses as a party may designate by five days advance written notice to the other party hereto.

 

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Company:

  Stronghold Technologies, Inc.
    106 Allen Road
    Basking Ridge, NJ 07920
    Attention:   Christopher J. Carey
    Telephone:   (201) 727-1400
    Facsimile:   (201) 288-9414

Holder:

  Stanford Venture Capital Holdings, Inc.
    6075 Poplar Avenue
    Memphis, TN 38119
    Attention:   James M. Davis, President
    Telephone:   (901) 680-5260
    Facsimile:   (901) 680-5265

 

11. GOVERNING LAW; JURISDICTION

 

This Warrant shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to its principles of conflict of laws. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Warrant may be brought against any party in the federal courts of Florida or the state courts of the State of Florida, and each of the parties consents to the jurisdiction of such courts and hereby waives, to the maximum extent permitted by law, any objection, including any objections based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions.

 

(Signature on the following page)

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on its behalf, in its corporate name, by its duly authorized officer, all as of the day and year first above written.

 

STRONGHOLD TECHNOLOGIES, INC.
By:  

/s/ Christopher J. Carey


Name:   Christopher J. Carey
Title:   President

 

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STRONGHOLD TECHNOLOGIES, INC.

 

WARRANT EXERCISE FORM

 

The undersigned hereby irrevocably elects (A) to exercise the Warrant dated June 16, 2004 (the “Warrant”), pursuant to the provisions of Section 1(a) of the Warrant, to the extent of purchasing                      shares of the common stock, par value $.0001 per share (the “Common Stock”), of Stronghold Technologies, Inc. and hereby makes a payment of $                     in payment therefor, or (B) to exercise the Warrant to the extent of purchasing                      shares of the Common Stock, pursuant to the provisions of Section 1(b) of the Warrant. In exercising the Warrant, the undersigned hereby confirms that the Common Stock to be issued hereunder is being acquired for investment and not with a view to the distribution thereof. Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below. Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below.

 

 


Name of Holder

 


Signature of Holder
or Authorized Representative

 


Signature, if jointly held

 


Name and Title of Authorized
Representative

 


 


Address of Holder

 


Date

 

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WARRANT ASSIGNMENT AND JOINDER

 

Reference is made to that certain Warrant, dated as of June 16, 2004 (the “Warrant”), to purchase in the aggregate 1,000,000 shares of the common stock, $.0001 par value per share (“Common Stock”), of Stronghold Technologies, Inc., a Nevada corporation (the “Company”). Capitalized terms not defined herein shall have the meaning given to them in the Note Purchase Agreement, dated as of June 16, 2004, by and among the Company, Stanford Venture Capital Holdings, Inc., a Delaware corporation, Christopher J. Carey and Mary Carey.

 

Now therefore, for value received,                      (“Holder”), hereby sells, assigns and transfers unto                      (“Assignee”) the right to purchase                      shares of Common Stock represented by the Warrant (“Warrant Shares”).

 

By execution and delivery of this Warrant Assignment and Joinder, Assignee, as successor to Holder with respect of the Warrant Shares (i) will be deemed to be a party to the Warrant and the Registration Rights Agreement, incorporated by this reference as though fully set forth herein, (ii) authorizes this Warrant Assignment and Joinder to be attached to the Warrant, and (iii) represents and warrants that Assignee is an Accredited Investor.

 

Assignee, as successor to Holder with respect to the Warrant Shares, will have all rights, and shall observe all the obligations, applicable to a “Holder” as set forth in the Warrant, an “Investor” as set forth in the Registration Rights Agreement, as though such Assignee had executed the Warrant and the Registration Rights Agreement as an initial Holder or Investor thereunder, and confirms his obligations under the Warrant and the Registration Rights Agreement.

 

Date:                     

 

COMPANY   HOLDER
Stronghold Technologies, Inc.        
By:  

 


  By:  

 


Name:  

 


  Name:  

 


Title:  

 


  Title:  

 


        ASSIGNEE
       

 


 

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