IRREVOCABLE TRANSFER AGENT INSTRUCTIONS April 1, 2006
IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS
April
1,
2006
Computershare
Trust Company
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Golden,
CO 80401
Attention: Securities
Team A
RE: PACER
HEALTH CORPORATION
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”)
of
even date herewith by and between Pacer Health Corporation, a Florida
corporation (the “Company”),
and
the Buyers set forth on Schedule I attached thereto (collectively the
“Buyers”)
and
that certain Insider Pledge and Escrow Agreement (the “Pledge
Agreement”)
of
even date herewith among the Pledgor, the Buyers and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as escrow
agent (the “Escrow
Agent”).
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 Two Million Dollars ($2,000,000), plus accrued
interest, which are convertible into shares of the Company’s common stock, par
value $.0001 per share (the “Common
Stock”),
at
the Buyers discretion. The Company has also issued to the Buyer warrants to
purchase up to 35,000,000 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 35,000,000 shares of Common Stock to be issued to the Buyers upon
exercise of the Warrant (the “Warrant
Shares”).
|
| 3. |
The
transfer of up to 430,422,903 shares of Common Stock (the “Escrowed
Shares”)
that have been delivered to the Escrow Agent pursuant to the Pledge
Agreement.
|
This
letter shall serve as the Company’s irrevocable authorization and direction to
Computershare Trust 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 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.
|
| 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.”
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.
|
| 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 the Company acknowledges and agrees 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. |
Escrowed
Shares.
|
| a. |
With
respect to the Escrowed Shares, upon an event of default as set forth
in
the Pledge Agreement, the Escrow Agent shall send written notice to
the
Transfer Agent (“Escrow
Notice”)
to transfer such number of Escrow Shares as set forth in the Escrow
Notice
to the Buyers. Upon receipt of an Escrow Notice and the share certificate
along with a properly executed stock power with Medallion guarantee,
the
Transfer Agent shall promptly transfer such number of Escrow Shares
to the
Buyers as shall be set forth in the Escrow Notice delivered to the
Transfer Agent by the Escrow Agent. Further, the Transfer Agent shall
promptly transfer such shares from the Buyers to any subsequent transferee
promptly upon receipt of written notice from the Buyers or their counsel
and the share certificate along with a properly executed stock power
with
Medallion guarantee. If the Escrow Shares are not registered for sale
under the Securities Act of 1933, as amended, then the certificates
for
the Escrow Shares shall bear the legend set forth in Section
1b.
|
| b. |
In
the event that counsel to the Company fails or refuses to render an
opinion as may be required by the Transfer Agent to affect a transfer
of
the Escrow Shares (either with or without restrictive legends, as
applicable), then the Company irrevocably and expressly authorizes
counsel
to the Buyers to render such opinion. The Transfer Agent shall accept
and
be entitled to rely on such opinion for the purpose of transferring
the
Escrow Shares.
|
3
| 3. |
All
Shares.
|
| a. |
The
Transfer Agent shall reserve for issuance to the Buyers a minimum of
296,873,754 Conversion Shares and 35,000,000 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.
|
| 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.
|
| 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.
|
| 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 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.
Removal
of Transfer Agent.
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.
Resignation
of Transfer Agent.
The
Transfer Agent may resign at any time upon giving at least thirty (30) days
written notice to the parties; provided, however, that no such resignation
shall
become effective until the appointment of a successor transfer agent, which
shall be accomplished by the parties using their best efforts to mutually agree
on a successor transfer agent within thirty (30) days after receiving such
notice. If the parties fail to agree upon a successor transfer agent within
such
time, the Transfer Agent shall have the right to petition a court of competent
jurisdiction for the appointment of a successor transfer agent. The successor
transfer agent shall execute and deliver an instrument accepting such
appointment and agreeing to be bound by the terms and conditions set forth
in
these Irrevocable Transfer Instructions and it shall, without further acts,
be
vested with all the estates, properties, rights, powers and duties of the
predecessor transfer agent as if originally named as transfer agent.
4
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, 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 indemnifies and holds the Transfer Agent, its legal representatives,
agents and successors harmless from and against any and all claims, actions,
suits and from and against any and all liabilities, losses, damages, judgments,
costs, charges, counsel fees and other expenses of every nature and character
which may arise from, or in connection with, any and all acts of any kind or
description taken by Transfer Agent pursuant to the terms of these Irrevocable
Transfer Agent Instructions including, without limitation, issuance of shares
free of any restrictive legend as authorized in paragraph 1(b) above without
receipt by Transfer Agent of any sale confirmation letter from Company or its
authorized representative. The liability of the Company under this
indemnification shall be absolute and unconditional and shall include liability
for any costs, charges, attorney’s fees and other expenses incurred by Transfer
Agent in enforcing the terms of this indemnity and the rights
hereunder.
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.
5
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
6
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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Pacer
Health Corporation
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By:_____________________________
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|
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Name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
|
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Title: Chief
Executive Officer
|
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|
ESCROW
AGENT:
|
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| ________________________________ | |
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
|
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COMPUTERSHARE
TRUST COMPANY,
INC.
By:________________________________
Name:______________________________
Title:_______________________________
COMPUTERSHARE
TRUST COMPANY, INC.
By:__________________________________
Name:_______________________________
Title:________________________________
7
SCHEDULE
I
SCHEDULE
OF BUYERS
|
Name
|
Signature
|
Address/Facsimile
Number
of Buyers
|
|
Cornell
Capital Partners, LP
|
By: Yorkville
Advisors, LLC
|
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
|
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Its: General
Partner
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Jersey
City, NJ 07303
|
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Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
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||
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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:
RE: PACER
HEALTH CORPORATION
Ladies
and Gentlemen:
We
are
counsel to Pacer Health Corporation, (the “Company”),
and
have represented the Company in connection with that certain Securities Purchase
Agreement, dated as of April 1, 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 $2,000,000
of secured convertible debentures, which shall be convertible into shares (the
“Conversion
Shares”)
of the
Company’s common stock, par value $0.0001 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 April 1, 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 _______, 2006, 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 __________, 2006 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.
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
VIA
FACSIMILE AND REGULAR MAIL
________
Attention:
RE: PACER
HEALTH CORPORATION
Ladies
and Gentlemen:
We
have
acted as special counsel to Pacer Health Corporation (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,
EXHIBIT
II-2
EXHIBIT
A
(LIST
OF SELLING STOCKHOLDERS)
|
Name:
|
No.
of Shares:
|
|
EXHIBIT
A