IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
February 17, 2006
American Stock Transfer & Trust Co.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
RE: NEOMEDIA TECHNOLOGIES INC.
Ladies and Gentlemen:
Reference is made to that certain Investment Agreement (the "Investment
Agreement") of even date herewith by and between Neomedia Technologies Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Company") and Cornell Capital Partners, LP (referred to as "Cornell" and/or a
"Buyer"). Pursuant to the Investment Agreement, the Company has sold to the
Buyers, and the Buyers have purchased from the Company Series C Preferred Shares
(the "Series C Preferred Shares") in the aggregate principal amount of Twenty
Seven Million Dollars ($27,000,000) which is convertible into shares of the
Company's common stock, no par value (the "Common Stock"), at the Buyer's
discretion. The Company has also issued to the Buyer warrants to purchase up to
75,000,000 shares of Common Stock, at the Buyer's discretion (collectively, 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 Series C Preferred Shares ("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 75,000,000 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
American Stock Transfer & Trust Co. (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, and the
Warrant 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 hereto as Exhibit A, 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."
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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 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.
2. All Shares.
a. The Transfer Agent shall reserve for issuance to the Buyers a
minimum of 175,000,000 shares of Common Stock for issuances
hereunder. 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 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.
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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.
The Company agrees that in the event that the Transfer Agent resigns as
the Company's transfer agent the Company shall engage a suitable replacement
transfer agent that will agree to serve as transfer agent and to be bound by the
terms and conditions of these Irrevocable Transfer Agent Instructions within
five (5) business days of such resignation.
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 Buyer 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 the Series C Preferred Shares under
the Investment Agreement. The furthers acknowledge that without such
representations and covenants of the Company and the Transfer Agent made
hereunder, the Buyers would not purchase the Series C Preferred Shares.
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 Buyer
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 Buyer 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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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:
Neomedia Technologies Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & Chief Executive Officer
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
AMERICAN STOCK TRANSFER & TRUST CO.
By:________________________________
Name:______________________________
Title:_____________________________
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SCHEDULE I-1
SCHEDULE I
SCHEDULE OF BUYERS
ADDRESS/FACSIMILE
NAME SIGNATURE NUMBER OF BUYERS
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Cornell Capital Partners, LP By: Yorkville Advisors, LLC ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
By:
Name: ▇▇▇▇ ▇▇▇▇▇▇
Its: Portfolio Manager
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EXHIBIT A
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF CONVERSION NOTICE
Reference is made to the Certificate of Designation of Series A
Convertible Preferred Stock of Neomedia Technologies, Inc.. (the "Company") and
the shares of Series C Convertible Preferred Stock issued thereunder ("Series C
Preferred Shares"). In accordance with and pursuant to the Series C Preferred
Shares, the undersigned hereby elects to convert Series C Preferred Shares into
shares of common stock, par value $0.001 per share (the "Common Stock"), of the
Company for the amount indicated below as of the date specified below.
Conversion Date: ___________________________
Amount to be converted: $__________________________
Conversion Price: $__________________________
Shares of Common Stock Issuable: ___________________________
Amount of Series A Preferred Shares unconverted: $__________________________
Please issue the shares of Common Stock in the following name and to the
following address:
Issue to: ___________________________
Authorized Signature: ___________________________
Name: ___________________________
Title: ___________________________
Phone #: ___________________________
Broker DTC Participant Code: ___________________________
Account Number*: ___________________________
* NOTE THAT RECEIVING BROKER MUST INITIATE TRANSACTION ON DWAC SYSTEM.
EXHIBIT I-1
EXHIBIT I
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
_________, 2006
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Attention:
RE: NEOMEDIA TECHNOLOGIES INC.
Ladies and Gentlemen:
We are counsel to Neomedia Technologies Inc., (the "Company"), and have
represented the Company in connection with that certain Investment Agreement,
dated as of February __, 2006 (the "Investment 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 $27,000,000 of Series C Preferred Shares, 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 Investment Agreement. Pursuant to the Investment Agreement, the Company also
has entered into a Registration Rights Agreement, dated as of February ___,
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 Investment 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 __________, 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.
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 I-2
EXHIBIT II
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 2006
VIA FACSIMILE AND REGULAR MAIL
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Attention:
RE: NEOMEDIA TECHNOLOGIES INC.
Ladies and Gentlemen:
We have acted as special counsel to Neomedia 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 _________ ___, 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
__________ ___, 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
