IRREVOCABLE TRANSFER AGENT INSTRUCTIONS October 10, 2006
IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS
October
10, 2006
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Continental
Stock Transfer & Trust Company
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▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ - 8th
Floor
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New
York, NY 10004
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Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”)
of
even date herewith by and between Titan Global Holdings, Inc., 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, an the Buyers shall purchase from the Company, convertible debentures
(collectively, the “Debentures”)
in the
aggregate principal amount of One Million Two Hundred Thousand Dollars
($1,200,000), plus accrued interest, which are convertible into shares of the
Company’s common stock, par value $0.001 per share (the “Common
Stock”),
at
the Buyers discretion. The Company has also issued to the Buyer warrants to
purchase up to 500,000 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. |
3,600,000
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”).
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| 2. |
Up
to 500,000 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 Continental
Stock Transfer & Trust Company (the “Transfer
Agent”)
to do
the following:
| 1. |
Conversion
Shares and Warrant Shares.
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| 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 the Escrow Agent on behalf of the Company. 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.
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| 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:
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“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.”
2
| 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.
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| d. |
Instructions
Applicable to Escrow Agent.
Upon the Escrow Agent’s receipt of a properly completed Conversion Notice
or Exercise Notice and the Aggregate Exercise Price (as defined in
the
Warrant), the Escrow 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.
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| 2. |
All
Shares.
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| a. |
The
Transfer Agent shall reserve for issuance to the Buyers a minimum of
3,600,000 Conversion Shares and 500,000 Warrant Shares. All such shares
shall remain in reserve with the Transfer Agent until the Buyers 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.
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| b. |
The
Company hereby irrevocably appoints the Escrow 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.
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| c. |
The
Transfer Agent shall rely exclusively on the Conversion Notice, the
Escrow
Notice, or the Exercise Notice and shall have no liability for relying
on
such instructions. Any Conversion Notice, Escrow 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.
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| 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.
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Certain
Notice Regarding the Escrow Agent.
The
Company and the Transfer Agent hereby acknowledge that the Escrow 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 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 Escrow
Agent shall be permitted to continue to represent the Buyers and neither the
Company nor the Transfer Agent will seek to disqualify such
counsel.
3
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.
During
the term of this Agreement, any attempt by Continental Stock to resign as
transfer agent hereunder upon less than fifteen (15) days written notice to
the
Company and the Buyer shall not be effective until the expiration of such
fifteen (15) day period (the “Notice
Period”).
The
Company shall use its best efforts to obtain a suitable replacement transfer
agent which agent shall have agreed to serve as transfer agent and to be bound
by the terms and conditions of these Transfer Agent Instructions within the
Notice Period referenced above. The Company’s obligation to obtain a suitable
replacement transfer agent shall not affect Continental Stock’s ability to
resign.
The
Company hereby confirms that while any portion of the Debenture
remains unpaid and unconverted the Company shall not, 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 acknowledges 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 further acknowledges that without
such representations and covenants of the Company made hereunder, the Buyers
would not purchase the Debentures.
The
Company 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.
4
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 ▇▇▇▇▇▇ 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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
5
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.
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COMPANY:
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TITAN
GLOBAL
HOLDINGS,
INC.
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| By: |
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇
▇. ▇▇▇▇▇▇
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Title: President
& CEO
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
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CONTINENTAL
STOCK
TRANSFER&
TRUST
COMPANY
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| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | |||
| Name: | ||||
| Title: |
6
SCHEDULE
I
SCHEDULE
OF BUYERS
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Name
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Signature
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Address/Facsimile
Number
of Buyers
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Cornell
Capital Partners, LP
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By: |
Yorkville
Advisors, LLC
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▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
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Its: General
Partner
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Jersey
City, NJ 07303
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Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
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| By: |
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Name: ▇▇▇▇
▇▇▇▇▇▇
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Its: Portfolio
Manager
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SCHEDULE
I-1
EXHIBIT
I
TO
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
_________,
2006
________
Attention:
Ladies
and Gentlemen:
We
are
counsel to Titan Global Holdings, Inc., (the “Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of October __, 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 $1,200,000
of secured convertible debentures, which shall be convertible into shares (the
“Conversion
Shares”)
of the
Company’s common stock, par value $0.001 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 a Registration
Rights Agreement, dated as of October ___, 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, | ||
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| By: | ||
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EXHIBIT
I- 2
EXHIBIT
II
TO
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM
OF OPINION
VIA
FACSIMILE AND REGULAR MAIL
________
Attention:
Ladies
and Gentlemen:
We
have
acted as special counsel to Titan Global Holdings, 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 _________ ___, 2006. 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 __________ ___,
2006.
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, | ||
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EXHIBIT
II-2
EXHIBIT
A
(LIST
OF SELLING STOCKHOLDERS)
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Name:
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No.
of Shares:
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EXHIBIT
A