Execution Copy
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
November 9, 2006
Worldwide Stock Transfer, LLC
000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
RE: SENSOR SYSTEM SOLUTIONS, INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement") of even date herewith by and between Sensor
System Solutions, 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, and the
Buyers shall purchase from the Company, convertible debentures (collectively,
the "Debentures") in the aggregate principal amount of Two Hundred Fifty Five
Thousand Dollars ($255,000), plus accrued interest, which are convertible into
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"), at the Buyers discretion. The Company has also issued to the Buyer
warrants dated the date hereof to purchase up to 30,000,000 shares of Common
Stock, at the Buyer discretion (the "Warrants"). These instructions relate to
the following stock or proposed stock issuances or transfers:
1. The Company has agreed to issue to the Buyers shares of the
Company's Common Stock 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 30,000,000 shares of Common Stock to be issued upon the
exercise of the Warrants ("Warrant Shares").
This letter shall serve as our irrevocable authorization and direction to
Worldwide Stock Transfer, LLC (the "Transfer Agent") to do the following:
1. Conversion Shares.
a. Instructions Applicable to Transfer Agent. With respect
to the Conversion Shares and the Interest Shares, the
Transfer Agent shall issue the Conversion 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 an exhibit to the
Debentures, delivered on behalf of the Company to the
Transfer Agent by Xxxxx Xxxxxxxx, Esq., as escrow agent
(the "Escrow Agent"). Upon receipt of a Conversion
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, a certificate,
registered in the name of the Buyers or their designees,
for the number of shares of Common Stock to which the
Buyers shall be entitled as set forth in the Conversion
Notice or (ii) provided Transfer Agent are 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
Buyers' or their designees' balance account with DTC
through its Deposit Withdrawal At Custodian ("DWAC")
system provided the Buyers 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 Buyers that certificates representing the Conversion
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 and the Interest Shares are not registered for
sale under the Securities Act of 1933, as amended, then
the certificates for the Conversion 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."
c. In the event that counsel to the Company fails or
refuses to render an opinion as required to issue the
Conversion 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 Buyers 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 substantially in the form attached as an exhibit
to the Debentures, the Escrow Agent shall, within one
(1) Trading Day thereafter, send to the Transfer Agent
the Conversion Notice, which shall constitute an
irrevocable instruction to the Transfer Agent to process
such Conversion Notice in accordance with the terms of
these instructions.
2. Warrant Shares.
a. Instructions Applicable to Transfer Agent. With respect
to the Warrant Shares, the Transfer Agent shall issue
the Warrant Shares to the Buyer from time to time upon
delivery to the Transfer Agent of a properly completed
and duly executed notice of the Buyer's election to
exercise the Warrants (the "Exercise Notice"), in the
form attached as an exhibit to the Warrants specifying
the number of Warrant Shares to be issued, delivered on
behalf of the Company to the Transfer Agent by the
Escrow Agent. Upon receipt of an Exercise Notice, the
Transfer Agent shall use its best efforts to within
three (3) Trading Days thereafter (i) issue and
surrender to a common carrier for overnight delivery to
the address as specified in 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
Exercise Notice or (ii) provided Transfer Agent are
participating in The Depository Trust Company ("DTC")
Fast Automated Securities Transfer Program, upon the
request of the --- Buyer, credit such aggregate number
of shares of Common Stock to which the Buyer shall be
entitled to the Buyer's or its 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.
The Company hereby confirms to the Transfer Agent and
Cornell that certificates representing 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 Warrant
Shares are not registered for sale under the Securities
Act of 1933, as amended, then the certificates for the
Warrant Shares shall bear the restrictive legend
referenced above in Section 1b.
b. In the event that counsel to the Company fails or
refuses to render an opinion as required to issue 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
Warrant Shares.
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c. Instructions Applicable to Escrow Agent. Upon the Escrow
Agent's receipt of a properly completed 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 an Exercise
Notice which shall constitute an irrevocable instruction
to the Transfer Agent to process such Exercise Notice in
accordance with the terms of these instructions.
3. All Shares.
a. The Transfer Agent shall reserve for issuance to the
Buyers the Conversion Shares and the 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 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.
c. 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.
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.
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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.
Transfer Agent Binding Disclaimer: In consideration for the Transfer Agent
agreeing to and attesting to all terms in the above Agreement, it is agreed by
and between the parties hereto that with regards to any lawsuit and or action
which may arise from the Buyers instructing the Transfer Agent to issue shares
based upon the legality of the Agreement where the Company denies the request in
full or in part for any reason whatsoever, the Company, Buyers and any other
third party involved agrees to defend, indemnify and hold harmless the Transfer
Agent, its successors and/or assigns from any and all claims from actions and
lawsuits, groundless or otherwise, and from any and all liabilities, taxes,
losses, damages, costs, charges, counsel fees and other expenses which may arise
from such action or lawsuit.
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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:
SENSOR SYSTEM SOLUTIONS, INC.
By:
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Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
Xxxxx Xxxxxxxx, Esq.
WORLDWIDE STOCK TRANSFER, LLC
By:
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Name:
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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:
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Name: Xxxx Xxxxxx
Its: Portfolio Manager
EXHIBIT I
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
_________, 2006
Attention:
RE: SENSOR SYSTEM SOLUTIONS, INC.
Ladies and Gentlemen:
We are counsel to Sensor System Solutions, Inc., (the "Company"), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of November ___, 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 $250,000 of secured convertible debentures,
which shall be convertible into shares (the "Conversion Shares") of the
Company's common stock, par value $.01 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 6, 2005, 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:
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EXHIBIT II
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 2006
VIA FACSIMILE AND REGULAR MAIL
Worldwide Stock Transfer, LLC
000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention:
RE: SENSOR SYSTEM SOLUTIONS, INC.
Ladies and Gentlemen:
We have acted as special counsel to Sensor System Solutions, 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.
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 Worldwide Stock Transfer, LLC 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 issuance 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 "A"
(LIST OF SELLING STOCKHOLDERS)
Name: No. of Shares:
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