Exhibit 10.11
AMENDMENT AND CONSENT
This Amendment and Consent ("Amendment") dated April 27, 2005, is made to
the certain Investor Registration Rights Agreement (the "Registration Rights
Agreement") dated as of December 20, 2004, by and between StrikeForce
Technologies, Inc., a corporation incorporated under the laws of the State of
New Jersey (the "Company"), and Cornell Capital Partners, L.P. (the "Investor")
entered into in connection with the Securities Purchase Agreement (the "Purchase
Agreement") dated as of December 20, 2004, between the Investor and the Company,
and the Amended and Restated Secured Convertible Debenture issued there under
and dated the date hereof (the "Debenture").
WHEREAS, the Company withdrew the Initial Registration Statement filed on
January 18, 2005 registering shares of Common Stock issuable upon conversion of
the Debentures and issuable pursuant to the Standby Equity Distribution
Agreement dated as of December 20, 2004, and refiled the Initial Registration
Statement with the SEC on February 11, 2005 to register the shares issuable
under the Debenture;
WHEREAS, the Company withdrew the Initial Registration Statement filed on
February 11, 2005 to prepare and file a new Registration Statement to include
approximately 6,660,000 additional shares of the Company's Common Stock to be
issued in connection with the Highgate Issuance (as defined below) (the "Amended
Registration Statement"); and
WHEREAS, the parties desire to extend the Company's deadlines for the
effectiveness of the Amended Registration Statement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. REGISTRATION. Section 2(a) of the Registration Rights Agreement shall be
amended and restated as follows:
(a) Subject to the terms and conditions of this Agreement, the
Company shall prepare and file, no later than thirty (30) days
from the date hereof (the "Scheduled Filing Deadline"), a
registration statement with the SEC on Form S-1 or SB-2 (or, if
the Company is then eligible, on Form S-3) under the Securities
Act (the "Amended Registration Statement") for the resale of the
Registrable Securities by the Investors, which includes at least
6,660,000 shares of Common Stock to be issued upon conversion of
the Convertible Debentures. The Company shall cause the
Registration Statement to remain effective until all of the
Registrable Securities have been sold. Prior to the filing of
the Registration Statement with the SEC, the Company shall
furnish a copy of the Initial Registration Statement to the
Investors for their review and comment. The Investors shall
furnish comments to the Initial Registration Statement to the
Company within twenty four (24) hours of the receipt thereof
from the Company.
2. Section 2(b) of the Registration Rights Agreement shall be amended and
restated as follows:
(b) Effectiveness of the Amended Registration Statement. The
Company shall use its best efforts (i) to have the Amended
Registration Statement declared effective by the SEC no later
than one hundred twenty (120) days after the filing thereof (the
"Scheduled Effective Deadline") and (ii) to insure that the
Amended Registration Statement and any subsequent Registration
Statement remains in effect until all of the Registrable
Securities have been sold, subject to the terms and conditions
of this Agreement. It shall be an event of default hereunder if
the Amended Registration Statement is not declared effective by
the SEC within one hundred twenty (120) days after the filing
thereof.
3. CONSENT. Notwithstanding Sections 4(k) and 4(p) of the Purchase
Agreement and Section 5.02 of the Debenture, the Investor hereby consents to the
issuance of convertible debentures in the aggregate principal amount of
$750,000, convertible into Common Stock of the Company and 150,000 shares of the
Common Stock of the Company to Highgate House Funds, Ltd, in accordance with the
terms of the term sheet attached hereto as Exhibit A ("Highgate Issuance") and
to register approximately 6,660,000 additional shares of the Company's Common
Stock on the Registration Statement, including approximately 6,510,000 shares of
Common Stock underlying a certain convertible debenture in the principal amount
of $750,000 and 150,000 shares of Common Stock. The parties agree that the
Investor's consent is a one time consent specific to the Highgate Issuance and
the related registration of such shares of Common Stock in connection with the
Highgate Issuance only and the Investor retains the right to enforce Sections
4(k) and 4(p) of the Purchase Agreement and Section 5.02 of the Debenture with
respect to any future issuances.
4. Effect on Purchase Agreement and the Transaction Documents. Except as
expressly set forth above, all of the terms and conditions of the Purchase
Agreement, the Debenture and the transaction documents with respect thereto
shall continue in full force and effect after the execution of this Amendment,
and shall not be in any way changed, modified or superseded by the terms set
forth herein, including Sections 4(k) and 4(p) of the Purchase Agreement and
Section 5.02 of the Debenture.
5. Effect on the Registration Rights Agreement. Except as expressly set
forth above, all of the terms and conditions of the Registration Rights
Agreement, shall continue in full force and effect after the execution of this
Amendment, and shall not be in any way changed, modified or superseded by the
terms set forth herein.
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6. Definitions. Capitalized terms not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement, the Registration Rights
Agreement and the Debenture.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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Executed as of April 27, 2005 by the undersigned duly authorized representatives
of the Company and Investor:
STRIKEFORCE TECHNOLOGIES, INC. CORNELL CAPITAL PARTNERS, L.P.
By: Yorkville Advisors, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇ Its: General Partner
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Portfolio Manager
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EXHIBIT "A"
CONFIDENTIAL TERM SHEET
CONVERTIBLE DEBENTURE
Issuer: StrikeForce Technologies, Inc.
Investor: Highgate House Funds, Ltd.
Securities: Seven Hundred Fifty Thousand Dollars ($750,000) (the
"Gross Proceeds") of securities in the form of a
promissory note convertible (the "Convertible"), into
shares of the Issuer's common stock ("Common Stock").
Term: Two (2) years from the date of closing ("Maturity').
Common Stock: Issuer shall issue to the Investor 150,000 shares of
Common Stock. These shares of Common Stock shall be
included on the registration statement to be filed by
the Issuer as described below.
Conversion: The Investor may at its sole option convert any or all
of the face amount of the Convertible plus a premium on
that amount accruing at a rate of seven percent (7%) per
annum, compounded monthly, from the date of closing to
the date of conversion ("Conversion Amount"). The number
of shares of Common Stock of the Issuer to be received
upon conversion will be determined by dividing the
Conversion Amount by the Conversion Price, as defined
below.
Conversion Price: At the Investor's sole option, the Convertible is
convertible into Common Stock at the lower of: (i) one
hundred twenty percent (120%) of the average closing bid
price for the five (5) trading days immediately
preceding the Closing Date (the "Fixed Price"); or
eighty percent (80%) of the lowest closing bid price for
the five (5) trading days immediately preceding the date
of conversion (the "Future Price").
Security: The Issuer will grant to the Investor a perfected
security interest in the assets of the Issuer as
evidenced by a UCC-1 filing. The Issuer will also
deposit into escrow shares of Common Stock equal to five
(5) times the Gross Proceeds ("Escrow Shares").
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Closing Date: The closing date will be the date on which
definitive documents are signed by and between the
Issuer and Investor ("Closing Date"). It is estimated
that the Closing Date shall take place within a
reasonable amount of time from the execution of this
term sheet, notwithstanding any and all due diligence
and documentation issues that can arise.
Disbursement: The Gross Proceeds shall be disbursed, subject to the
deduction of any and all fees, in equal installments as
follows: one half (1/2) on the Closing Date and one half
(1/2) upon the filing of a registration statement as
described herein.
Redemption: The Issuer must redeem the Convertible upon Maturity.
The Issuer shall have the right to redeem the
Convertible at any time prior to Maturity, upon three
(3) business days prior written notice, any or
all-outstanding Convertible remaining in its sole
discretion. The redemption price shall be one hundred
twenty percent (120%) of the face amount redeemed plus
accrued interest, subject to the maximum amount of
interest allowed to be charged by law. In the event the
Issuer redeems the Convertible within one hundred eighty
(180) days of Closing, then the redemption price shall
be one hundred ten percent (110%).
Registration: Promptly, but no later than thirty (30) calendar days
from the Closing Date, the Issuer shall file a
registration statement (on Form SB-2, or similar form)
with the United States Securities & Exchange Commission
("SEC") covering the shares of Common Stock and the
shares of Common
Stock underlying the Convertible (the "Registration
Statement"). The Issuer shall use its best
efforts to ensure that such Registration Statement is
declared effective within ninety (90) calendar days of
the date of filing with the SEC. In the event the
Registration Statement is not declared effective within
ninety (90) calendar days, then the Issuer shall pay to
the Investor in cash or shall issue to the Investor
shares of the Issuer's common stock, at the Issuer's
sole election, within three (3) business days from the
end of the month, an amount equal to two percent (2%)
per month of the outstanding principal amount of the
Convertible as liquidated damages and not as a penalty.
The Issuer shall keep the Registration Statement
"Evergreen" for the life of the Convertible or until
Rule 144(k) of the Securities Act of 1933, as amended,
is available to the Investor, whichever is later. The
Issuer shall retain, and pay at its sole expense, a law
firm to file the Registration Statement from a list of
approved law firms provided by the Investor.
Share Issuance: At all times, the Issuer shall keep available Common
Stock duly authorized for issuance against the
Convertible including the Escrow Shares. If at any time,
the Issuer does not have available an amount of
authorized and non-issued Common Stock necessary to
satisfy issuance of the Escrow Shares, the Issuer shall
call and hold a special meeting within thirty (30) days
of such occurrence, for the sole purpose of increasing
the number of shares of Common Stock authorized.
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Management of the Issuer shall recommend to shareholders
to vote in favor of increasing the number of Common
Stock authorized. Management shall also vote all of its
shares in favor of increasing the number of Common Stock
authorized.
No Shorting: Neither the Investor nor its affiliates has an open
short position in the Common Stock of the Issuer, and
the Investor agrees that it will not, and that it will
cause its affiliates not to, engage in any short sales
of, or hedging transactions with respect to the Common
Stock.
Banker's Fees: The Investor shall receive cash compensation equal
to ten percent (10%) of the Gross Proceeds of the
Convertible to be paid directly from escrow from
Disbursement as described above.
Legal Fee: The Issuer agrees to pay a structuring fee of
$10,000 in connection with this transaction upon
execution of the Term Sheet. The Issuer shall bear all
of its own legal and professional fees and expenses,
including but not limited to those associated with the
filing of its Registration Statement as contemplated
herein.
Expenses: The Issuer agrees to pay to a non-refundable due
diligence fee of $5,000 upon execution of the Term
Sheet.
[SIGNATURE PAGE TO IMMEDIATELY FOLLOW]
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If the terms and conditions contained herein in this four (4) page Term Sheet as
of the date first written above are satisfactory, then please sign as indicated
below. We appreciate this opportunity to work with you on this investment.
HIGHGATE HOUSE FUNDS, LTD.
By:___________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its: Portfolio Manager
StrikeForce Technologies, Inc.
By:___________________________
Name: ▇▇▇▇ ▇▇▇
Title:Chief Executive Officer