EXHIBIT 4.06
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
December 14, 2005
Interstate Transfer Company
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 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, Inc., a Nevada corporation (the "COMPANY"), and the Buyers set
forth on Schedule I attached thereto (collectively the "BUYERS") and that
certain Escrow Shares Escrow Agreement (the "ESCROW AGREEMENT") of even date
herewith among the Company, the Buyers and Gottbetter & Partners, LLP, 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 One Million, Six Hundred Eighty Five Thousand and
Three Hundred Fifteen Dollars and Sixty Four Cents ($1,685,315.64), 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. These
instructions relate to the following stock or proposed stock issuances or
transfers:
1. The Company has agreed to issue to the Buyers (i) up to Seven
Million Seventy One Thousand (7,071,000) shares of Common Stock upon
conversion of the Debentures ("CONVERSION SHARES") including the
shares of Common Stock to be issued to the Buyers upon conversion of
accrued interest into Common Stock and (ii) 100,000 shares of Common
Stock upon exercise of the Warrant (as defined in the Securities
Purchase Agreement) (the "WARRANT SHARES") if required under the
Securities Purchase Agreement.
2. The Company has issued Seven Million One Hundred Seventy One
Thousand (7,171,000)shares of Common Stock (the "ESCROW SHARES") in
the Buyer's name that have been or are being delivered to the Escrow
Agent pursuant to the Securities Purchase Agreement and the Escrow
Agreement.
This letter shall serve as our irrevocable authorization and direction to
Interstate Transfer Company (the "TRANSFER AGENT") to do the
following:
1. CONVERSION SHARES.
a. INSTRUCTIONS APPLICABLE TO TRANSFER AGENT. With respect to the
Conversion Shares and the Warrant Shares, the Transfer Agent
shall issue the Conversion Shares or 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 I, delivered on behalf of the Company to the Transfer
Agent by the Escrow Agent or a properly completed and duly
executed notice of exercise substantially in the form attached
to the Warrant (the "EXERCISE NOTICE"), respectively. Upon
receipt of a Conversion Notice or 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 Exercise Notice, a certificate or certificates, 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 Exercise
Notice or (ii) provided that 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 Buyers' or their
designees' balance account with DTC through their Deposit
Withdrawal At Custodian ("DWAC") system provided the Buyers
cause their bank or broker to initiate the DWAC transaction.
For purposes hereof "TRADING DAY" shall mean any day on which
the Nasdaq National Market is open for customary trading.
b. The Company hereby confirms to the Transfer Agent and the
Buyers that certificates representing the Conversion Shares
and 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 II attached hereto and (ii) an opinion of counsel in
the form set forth in EXHIBIT III attached hereto, and that if
the Conversion Shares and the Warrant Shares are not
registered for resale under the Securities Act of 1933, as
amended, then the provisions of paragraph 1(a)(ii), above,
shall not be applicable until such shares are registered, and
the certificates for the Conversion Shares and Warrant 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
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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
or 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 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 and Warrant Shares.
d. INSTRUCTIONS APPLICABLE TO ESCROW AGENT. Upon the Escrow
Agent's receipt of a properly completed Conversion Notice
and/or the Exercise Notice, the Escrow Agent shall, within one
(1) Trading Day thereafter, send to the Transfer Agent a
Conversion Notice and/or the Exercise Notice in the form
attached hereto as EXHIBIT I, which shall constitute an
irrevocable instruction to the Transfer Agent to process such
Conversion Notice in accordance with the terms of these
instructions.
2. ESCROW SHARES.
a. If the Escrow Agent sends the Escrow Shares to the Transfer
Agent for removal of the restrictive legend, the Company
hereby confirms that the Transfer Agent shall reissue to the
Escrow Agent the Escrow Shares which 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 II attached hereto and (ii)
an opinion of counsel in the form set forth in EXHIBIT III
attached hereto, or counsel to the Company shall issue a legal
opinion to the Company's Transfer Agent that the legend shall
be removed pursuant to Rule 144, Rule 144(k) or applicable
requirements of the Securities Act.
b. In the event that counsel to the Company fails or refuses to
render an opinion as required to issue the Escrow 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 Escrow Shares without a legend.
3. ALL SHARES.
a. The Transfer Agent shall reserve for issuance to the Buyers
the Conversion Shares and 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 Transfer Agent shall rely exclusively on the Conversion
Notice and Exercise Notice and shall have no liability for
relying on such instructions. Any Conversion 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,
the managing partner of the Escrow Agent is a director 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.
The Company hereby 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 Buyer, (i) issue any
Common Stock or Preferred Stock without consideration or for a consideration per
share less than the Closing Bid Price (as defined in the Securities Purchase
Agreement) of the Common Stock 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 such
Common Stock's Closing Bid Price determined immediately prior to its issuance,
or (iii) issue any shares of the Company's Common Stock pursuant to Form S-8.
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 are 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
4
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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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: Secretary, Chief Operating Officer
GOTTBETTER & PARTNERS, LLP
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Managing Partner
INTERSTATE TRANSFER COMPANY
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
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SCHEDULE I
SCHEDULE OF BUYERS
ADDRESS/FACSIMILE
NAME SIGNATURE NUMBER OF BUYERS
--------------------------------------------------------------------------------
Highgate House Funds, Ltd By: /s/ Xxxx X. Xxxxxxxxxx 000 Xxxxxxx Xxxxxx
----------------------- New York, NY 10022
Name: Xxxx X. Xxxxxxxxxx Xxxxxxxxx: (000) 000-0000
Its: Portfolio Manager
SCHEDULE I-1
EXHIBIT I
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF CONVERSION NOTICE
Reference is made to the Securities Purchase Agreement (the "SECURITIES PURCHASE
AGREEMENT") between Nanoscience Technologies, Inc., (the "COMPANY"), and the
Buyers set forth on Schedule I attached thereto dated December ___, 2005. In
accordance with and pursuant to the Securities Purchase Agreement, the
undersigned hereby elects to convert convertible debentures 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 Debenture unconverted: $________________________
Amount of Interest Converted: $________________________
Conversion Price of Interest: $________________________
Shares of Common Stock Issuable: _________________________
Shares of Common Stock Issuable: _________________________
Total Number of shares of Common Stock to be issued: _________________________
Please issue the shares of Common Stock in the following name and to the
following address:
Issue to: ____________________________
Authorized Signature: ____________________________
Name: ____________________________
Title: ____________________________
EXHIBIT I-1
Phone #: ____________________________
Broker DTC Participant Code: ____________________________
Account Number*: ____________________________
* NOTE THAT RECEIVING BROKER MUST INITIATE TRANSACTION ON DWAC SYSTEM.
EXHIBIT I-2
EXHIBIT II
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Date]
Interstate Transfer Company
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
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 December ___, 2005 (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 (i) One Million, Six Hundred Ninety Thousand and
Three Hundred and Fifty-Nine Dollars and Twenty Cents ($1,690,359.20) 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"), (ii) 100,000 shares of common stock pursuant to a warrant in accordance
with the terms of the Securities Purchase Agreement (the "WARRANT SHARES") and
(iii) Seven Million One Hundred Seventy One Thousand (7,171,000) shares of
Common Stock held in escrow (the "ESCROW SHARES"). Pursuant to the Securities
Purchase Agreement, the Company also has entered into a Registration Rights
Agreement, dated as of December ___, 2005, with the Buyers (the "INVESTOR
REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed, among
other things, to register the Conversion Shares, the Escrow Shares and the
Warrant 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, the Escrow Shares and the Warrant 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
EXHIBIT II-1
before, or threatened by, the SEC and the Conversion Shares, the Escrow Shares
and the Warrant Shares are available for sale under the 1933 Act pursuant to the
Registration Statement.
The Buyer 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, the Escrow Shares and the
Warrant Shares.
Very truly yours,
By:
---------------------------
EXHIBIT II-2
EXHIBIT III
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
[Date]
VIA FACSIMILE AND REGULAR MAIL
Interstate Transfer Company
0000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
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
__________ ___, 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 resold 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 resale 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 the Transfer
EXHIBIT III-1
Agent may issue the Shares without restrictive legends or the Transfer Agent 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 III-2
EXHIBIT "A"
(LIST OF SELLING STOCKHOLDERS)
NAME: NO. OF SHARES:
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