IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
July 28, 2006
Interstate Transfer Company
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx
RE: NANOSCIENCE TECHNOLOGIES, INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT") of even date herewith by and between
Nanoscience Technologies, a Nevada corporation (the "COMPANY"), and the Buyers
set forth on Schedule I attached thereto (collectively the "BUYERS"). Pursuant
to the Securities Purchase Agreement, the Company shall sell to the Buyers, and
the Buyers shall purchase from the Company, convertible debentures
(collectively, the "DEBENTURES") in the aggregate principal amount of One
Hundred Twenty Thousand Dollars ($120,000), plus accrued interest, which are
convertible into shares of the Company's common stock, par value $.001 per share
(the "COMMON STOCK"), at the Buyers discretion. The Company has also issued to
the Buyer warrants to purchase up to 1,000,000 shares of Common Stock, at the
Buyer's discretion (the "WARRANT"). These instructions relate to the following
stock or proposed stock issuances or transfers:
1. Shares of Common Stock to be issued to the Buyers upon
conversion of the Debentures ("CONVERSION SHARES") plus the
shares of Common Stock to be issued to the Buyers upon
conversion of accrued interest and liquidated damages into
Common Stock (the "INTEREST SHARES").
2. Up to 1,000,000 shares of Common Stock to be issued to the
Buyers upon exercise of the Warrant (the "WARRANT SHARES").
This letter shall serve as our irrevocable authorization and direction
to Interstate Transfer Company (the "TRANSFER AGENT") to do the following:
1. CONVERSION SHARES AND WARRANT SHARES.
a. INSTRUCTIONS APPLICABLE TO TRANSFER AGENT. With
respect to the Conversion Shares, Warrant Shares and
the Interest Shares, the Transfer Agent shall issue
the Conversion Shares, Warrant Shares and the
Interest Shares to the Buyers from time to time upon
delivery to the Transfer Agent of a properly
completed and duly executed Conversion Notice (the
"CONVERSION NOTICE") in the form attached as Exhibit
A to the Debentures, or a properly completed and duly
executed Exercise Notice (the "EXERCISE NOTICE") in
the form attached as Exhibit A to the Warrant,
delivered to the Transfer Agent by Xxxxx Xxxxxxxx,
Esq., as Agent on behalf of the Company ("Conversion
Agent"). Upon receipt of a Conversion Notice or an
Exercise Notice, the Transfer Agent shall within
three (3) Trading Days thereafter (i) issue and
surrender to a common carrier for overnight delivery
to the address as specified in the Conversion Notice
or the Exercise Notice, a certificate, registered in
the name of the Buyer or its designees, for the
number of shares of Common Stock to which the Buyer
shall be entitled as set forth in the Conversion
Notice or Exercise Notice or (ii) provided the
Transfer Agent is participating in The Depository
Trust Company ("DTC") Fast Automated Securities
Transfer Program, upon the request of the Buyers,
credit such aggregate number of shares of Common
Stock to which the Buyers shall be entitled to the
Buyer's or their designees' balance account with DTC
through its Deposit Withdrawal At Custodian ("DWAC")
system provided the Buyer causes its bank or broker
to initiate the DWAC transaction. For purposes hereof
"TRADING DAY" shall mean any day on which the Nasdaq
Market is open for customary trading.
b. The Company hereby confirms to the Transfer Agent and
the Buyer that certificates representing the
Conversion Shares and the Warrant Shares shall not
bear any legend restricting transfer and should not
be subject to any stop-transfer restrictions and
shall otherwise be freely transferable on the books
and records of the Company; PROVIDED THAT counsel to
the Company delivers (i) the Notice of Effectiveness
set forth in EXHIBIT I attached hereto and (ii) an
opinion of counsel in the form set forth in EXHIBIT
II attached hereto, and that if the Conversion
Shares, Warrant Shares and the Interest Shares are
not registered for sale under the Securities Act of
1933, as amended, then the certificates for the
Conversion Shares, Warrant Shares and Interest Shares
shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT."
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c. In the event that counsel to the Company fails or
refuses to render an opinion as required to issue the
Conversion Shares or the Warrant Shares in accordance
with the preceding paragraph (either with or without
restrictive legends, as applicable), then the Company
irrevocably and expressly authorizes counsel to the
Buyer to render such opinion. The Transfer Agent
shall accept and be entitled to rely on such opinion
for the purposes of issuing the Conversion Shares.
d. INSTRUCTIONS APPLICABLE TO CONVERSION AGENT. Upon the
Conversion Agent's receipt of a properly completed
Conversion Notice or Exercise Notice and the
Aggregate Exercise Price (as defined in the Warrant),
the Conversion Agent shall, within one (1) Trading
Day thereafter, send to the Transfer Agent the
Conversion Notice or Exercise Notice as the case may
be, which shall constitute an irrevocable instruction
to the Transfer Agent to process such Conversion
Notice or Exercise Notice in accordance with the
terms of these instructions.
2. ALL SHARES.
a. The Transfer Agent shall reserve for issuance to the
Buyers a minimum of 2,500,000 Conversion Shares and
1,000,000 Warrant Shares. All such shares shall
remain in reserve with the Transfer Agent until the
Buyer provides the Transfer Agent instructions that
the shares or any part of them shall be taken out of
reserve and shall no longer be subject to the terms
of these instructions.
b. The Company hereby irrevocably appoints the
Conversion Agent as a duly authorized agent of the
Company for the purposes of authorizing the Transfer
Agent to process issuances and transfers specifically
contemplated herein.
c. The Transfer Agent shall rely exclusively on the
Conversion Notice or the Exercise Notice and shall
have no liability for relying on such instructions.
Any Conversion Notice or Exercise Notice delivered
hereunder shall constitute an irrevocable instruction
to the Transfer Agent to process such notice or
notices in accordance with the terms thereof. Such
notice or notices may be transmitted to the Transfer
Agent by facsimile or any commercially reasonable
method.
d. The Company hereby confirms to the Transfer Agent and
the Buyers that no instructions other than as
contemplated herein will be given to Transfer Agent
by the Company with respect to the matters referenced
herein. The Company hereby authorizes the Transfer
Agent, and the Transfer Agent shall be obligated, to
disregard any contrary instructions received by or on
behalf of the Company.
CERTAIN NOTICE REGARDING THE CONVERSION AGENT. The Company and the
Transfer Agent hereby acknowledge that the Conversion Agent is general counsel
to the Buyers, a partner of the general partner of the Buyers and counsel to the
Buyers in connection with the transactions
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contemplated and referred herein. The Company and the Transfer Agent agree that
in the event of any dispute arising in connection with this Agreement or
otherwise in connection with any transaction or agreement contemplated and
referred herein, the Conversion Agent shall be permitted to continue to
represent the Buyers and neither the Company nor the Transfer Agent will seek to
disqualify such counsel.
The Company hereby agrees that it shall not replace the Transfer Agent
as the Company's transfer agent without the prior written consent of the Buyers.
Any attempt by Transfer Agent to resign as the Company's transfer agent
hereunder shall not be effective until such time as the Company provides to the
Transfer Agent written notice that a suitable replacement has agreed to serve as
transfer agent and to be bound by the terms and conditions of these Irrevocable
Transfer Agent Instructions.
The Company herby confirms and the Transfer Agent acknowledges that
while any portion of the Debenture remains unpaid and unconverted the Company
and the Transfer Agent shall not, except with respect to Excluded Securities (as
defined in the Warrant), without the prior consent of the Buyers, (i) issue any
Common Stock or Preferred Stock without consideration or for a consideration per
share less than closing bid price determined immediately prior to its issuance,
(ii) issue any Preferred Stock, warrant, option, right, contract, call, or other
security or instrument granting the holder thereof the right to acquire Common
Stock without consideration or for a consideration per share less than the
closing bid price of the Common Stock determined immediately prior to its
issuance, (iii) issue any S-8 shares of the Company's Common Stock.
The Company and the Transfer Agent hereby acknowledge and confirm that
complying with the terms of this Agreement does not and shall not prohibit the
Transfer Agent from satisfying any and all fiduciary responsibilities and duties
it may owe to the Company.
The Company and the Transfer Agent acknowledge that the Buyers is
relying on the representations and covenants made by the Company and the
Transfer Agent hereunder and are a material inducement to the Buyers purchasing
convertible debentures under the Securities Purchase Agreement. The Company and
the Transfer Agent further acknowledge that without such representations and
covenants of the Company and the Transfer Agent made hereunder, the Buyers would
not purchase the Debentures.
Each party hereto specifically acknowledges and agrees that in the
event of a breach or threatened breach by a party hereto of any provision
hereof, the Buyers will be irreparably damaged and that damages at law would be
an inadequate remedy if these Irrevocable Transfer Agent Instructions were not
specifically enforced. Therefore, in the event of a breach or threatened breach
by a party hereto, including, without limitation, the attempted termination of
the agency relationship created by this instrument, the Buyers shall be
entitled, in addition to all other rights or remedies, to an injunction
restraining such breach, without being required to show any actual damage or to
post any bond or other security, and/or to a decree for specific performance of
the provisions of these Irrevocable Transfer Agent Instructions.
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These instructions shall be governed by and construed in accordance
with the laws of the State of New Jersey, without giving effect to conflicts of
laws thereof. Each of the parties consents to the jurisdiction of the Superior
Courts of the State of New Jersey sitting in Xxxxxx County, New Jersey and the
U.S. District Court for the District of New Jersey sitting in Newark, New Jersey
in connection with any dispute arising under this Debenture and hereby waives,
to the maximum extent permitted by law, any objection, including any objection
based on FORUM NON CONVENIENS to the bringing of any such proceeding in such
jurisdictions.
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IN WITNESS WHEREOF, the parties have caused this letter agreement
regarding Irrevocable Transfer Agent Instructions to be duly executed and
delivered as of the date first written above.
COMPANY:
NANOSCIENCE TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx
Title: Chief Operating Officer
/s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx, Esq.
INTERSTATE TRANSFER COMPANY
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxx
Title:
---------------------
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SCHEDULE I
SCHEDULE OF BUYERS
ADDRESS/FACSIMILE
NAME SIGNATURE NUMBER OF BUYERS
Cornell Capital Partners, LP By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxx: Xxxxxxx Xxxxxxx Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
By: /s/ Xxxx Xxxxxx
----------------------
Name: Xxxx Xxxxxx
Its: Portfolio Manager
SCHEDULE I-1
EXHIBIT I
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
_________, 2006
_________
Attention:
RE: NANOSCIENCE TECHNOLOGIES, INC.
Ladies and Gentlemen:
We are counsel to Nanoscience Technologies, Inc. (the "COMPANY"), and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of July __, 2006 (the "SECURITIES PURCHASE AGREEMENT"),
entered into by and among the Company and the Buyers set forth on Schedule I
attached thereto (collectively the "BUYERS") pursuant to which the Company has
agreed to sell to the Buyers up to $120,000 of secured convertible debentures,
which shall be convertible into shares (the "CONVERSION SHARES") of the
Company's common stock, par value $.001 per share (the "COMMON STOCK"), in
accordance with the terms of the Securities Purchase Agreement. Pursuant to the
Securities Purchase Agreement, the Company also has entered into an Investor
Registration Rights Agreement, dated as of July ____, 2006, with the Buyers (the
"INVESTOR REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed,
among other things, to register the Conversion Shares under the Securities Act
of 1933, as amended (the "1933 ACT"). In connection with the Company's
obligations under the Securities Purchase Agreement and the Registration Rights
Agreement, on _______, 2005, the Company filed a Registration Statement (File
No. ___-_________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the sale of the Conversion Shares.
In connection with the foregoing, we advise the Transfer Agent that a
member of the SEC's staff has advised us by telephone that the SEC has entered
an order declaring the Registration Statement effective under the 1933 Act at
____ P.M. on __________, 2005 and we have no knowledge, after telephonic inquiry
of a member of the SEC's staff, that any stop order suspending its effectiveness
has been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Conversion Shares are available for sale under
the 1933 Act pursuant to the Registration Statement.
EXHIBIT I-1
The Buyers has confirmed it shall comply with all securities laws and
regulations applicable to it including applicable prospectus delivery
requirements upon sale of the Conversion Shares.
Very truly yours,
By:
----------------------------------
EXHIBIT I-2
EXHIBIT II
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 2006
VIA FACSIMILE AND REGULAR MAIL
__________
Attention:
RE: NANOSCIENCE TECHNOLOGIES, INC.
Ladies and Gentlemen:
We have acted as special counsel to Nanoscience Technologies, Inc. (the
"COMPANY"), in connection with the registration of ___________shares (the
"SHARES") of its common stock with the Securities and Exchange Commission (the
"SEC"). We have not acted as your counsel. This opinion is given at the request
and with the consent of the Company.
In rendering this opinion we have relied on the accuracy of the
Company's Registration Statement on Form SB-2, as amended (the "REGISTRATION
STATEMENT"), filed by the Company with the SEC on _________ ___, 2005. The
Company filed the Registration Statement on behalf of certain selling
stockholders (the "SELLING STOCKHOLDERS"). This opinion relates SOLELY to the
Selling Shareholders listed on EXHIBIT "A" hereto and number of Shares set forth
opposite such Selling Stockholders' names. The SEC declared the Registration
Statement effective on __________ ___, 2005.
We understand that the Selling Stockholders acquired the Shares in a
private offering exempt from registration under the Securities Act of 1933, as
amended. Information regarding the Shares to be sold by the Selling Shareholders
is contained under the heading "Selling Stockholders" in the Registration
Statement, which information is incorporated herein by reference. This opinion
does not relate to the issuance of the Shares to the Selling Stockholders. The
opinions set forth herein relate solely to the sale or transfer by the Selling
Stockholders pursuant to the Registration Statement under the Federal laws of
the United States of America. We do not express any opinion concerning any law
of any state or other jurisdiction.
In rendering this opinion we have relied upon the accuracy of the
foregoing statements.
EXHIBIT II
Based on the foregoing, it is our opinion that the Shares have been
registered with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, and that ________ may remove the restrictive legends
contained on the Shares. This opinion relates SOLELY to the number of Shares set
forth opposite the Selling Stockholders listed on EXHIBIT "A" hereto.
This opinion is furnished to Transfer Agent specifically in connection
with the sale or transfer of the Shares, and solely for your information and
benefit. This letter may not be relied upon by Transfer Agent in any other
connection, and it may not be relied upon by any other person or entity for any
purpose without our prior written consent. This opinion may not be assigned,
quoted or used without our prior written consent. The opinions set forth herein
are rendered as of the date hereof and we will not supplement this opinion with
respect to changes in the law or factual matters subsequent to the date hereof.
Very truly yours,
EXHIBIT II-2
EXHIBIT A
(LIST OF SELLING STOCKHOLDERS)
NAME: NO. OF SHARES:
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EXHIBIT A
