IRREVOCABLE TRANSFER AGENT INSTRUCTIONS May 27, 2010
May 27,
2010
WorldWide
Stock Transfer , LLC
000
Xxxxxxxxxx Xxxxxx, Xxxxx L
Hackensack,
New Jersey 07601
RE: NEOMEDIA
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 Neomedia Technologies,
Inc, a Delaware corporation (the “Company”), and YA
Global Investments, LP (the “Buyer”). Pursuant
to the Securities Purchase Agreement, the Company shall sell to the Buyer, and
the Buyer shall purchase from the Company, a convertible debentures (the “Debenture”) in the
aggregate principal amount of $2, 006,137.04, plus accrued
interest, which are convertible into shares of the Company’s common stock, par
value $.001 per share (the “Common Stock”), at
the Buyer’s discretion. The Company has also issued to the Buyer
warrants to purchase up to 5,000,000 shares of Common Stock, at the Buyer’s
discretion (the “Warrant”). These
instructions relate to the following stock or proposed stock issuances or
transfers:
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1.
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Shares
of Common Stock to be issued to the Buyer upon conversion of the Debenture
(“Conversion
Shares”) plus the shares of Common Stock to be issued to the Buyer
upon conversion of accrued interest and liquidated damages into Common
Stock (the “Interest
Shares”).
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2.
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Up
to 5,000,000 shares of Common Stock to be issued to the Buyer upon
exercise of the Warrant (the “Warrant
Shares”).
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This
letter shall serve as our irrevocable authorization and direction to WorldWide
Stock Transfer, LLC (the “Transfer Agent”) to
do the following:
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1.
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Conversion Shares, Warrant
Shares and Interest Shares.
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a.
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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 Buyer
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 to the Debenture,
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 Company or on behalf of the Company
by Xxxxx Xxxxxxxx, Esq. as escrow agent (the “Escrow
Agent”). Upon receipt of a Conversion Notice or an
Exercise Notice, the Transfer Agent shall, as soon as reasonably practical
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 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 that the Buyer causes its bank or broker to initiate the DWAC
transaction, and further provided that a certificate representing such
shares of Common Stock would not be required to bear a legend restricting
transfer.
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b.
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The Company hereby confirms to
the Transfer Agent and the Buyer that certificates representing the
Conversion Shares, Warrant Shares and Interest 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 Buyer confirm to the Transfer
Agent and the Company that the Conversion Shares, Warrant Shares and
Interest Shares have been or will be sold only pursuant to an effective
registration statement for such securities under the Securities Act of
1933, as amended (the “Act”), and that the Buyer has complied, or will
comply, with all applicable prospectus delivery requirements; and further 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 Act, 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.”
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c.
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In
the event that counsel to the Company fails or refuses to render an
opinion as required to issue the Conversion Shares, the Warrant Shares or
the Interest 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,
the Warrant Shares or the Interest
Shares.
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d.
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Upon
the Company’s or the Escrow Agent’s receipt of a properly completed
Conversion Notice or Exercise Notice (along with evidence that the
Aggregate Exercise Price (as defined in the Warrant) has been delivered to
the Company), the Company or the Escrow Agent, as the case may be, shall,
within one 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. For purposes hereof “Trading
Day” shall
mean any day on which the Nasdaq Market is open for customary
trading.
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2.
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All
Shares.
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a.
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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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b.
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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.
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c.
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The
Company hereby confirms to the Transfer Agent and the Buyer 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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3.
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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 Buyer, a partner of the
general partner of the Buyer and counsel to the Buyer 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 Buyer and neither
the Company nor the Transfer Agent will seek to disqualify such
counsel.
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4.
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Company
Acknowledgments.
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a.
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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
Buyer.
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b.
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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 5 business days from the effectiveness of such
resignation.
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c.
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The
Company acknowledges that the Buyer is relying on the representations and
covenants made by the Company hereunder and are a material inducement to
the Buyer purchasing the Debenture pursuant to the Securities Purchase
Agreement. The Company further acknowledges that without such
representations and covenants of the Company made hereunder, the Buyer
would not purchase the Debenture.
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d.
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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 the Company, 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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5.
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Transfer Agent Binding
Disclaimer: In consideration for the Transfer Agent
agreeing and attesting to all terms in the above referenced Irrevocable
Transfer Agent Instructions, in particular any kind of lawsuit and or
action that may arise from the Buyer’s instructing the Transfer Agent to
issue shares based on the legality of the Securities Purchase Agreement
whereas the Company is denying the request in full or partially for
whatever reason, the Company, Buyer and any other third party involved
agree for ourselves, our successors, legal representatives and assigns, at
all times to defend, indemnify and save the Transfer Agent, their
successors and assigns, free and harmless from and against any and all
claims, from actions, suits, whether groundless or otherwise, and from and
against any and all liabilities, taxes, losses, damages, costs, charges,
counsel fees, and other expenses of every nature and character that arises
from this action.
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[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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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Neomedia
Technologies, Inc.
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By:
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/s/ Xxxxxxx X. Xxxx | |
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Name:
Xxxxxxx X. Xxxx
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Title: Chief
Financial Officer
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BUYER:
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YA
Global Investments, L.P.
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By: Yorkville
Advisors, LLC
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Its: Investment
Manager
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By:
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/s/ Xxxxxx Xxxxx | |
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Name:
Xxxxxx Xxxxx
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Title:
Managing Member
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ESCROW
AGENT
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By:
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/s/ Xxxxx Xxxxxxxx | |
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Xxxxx
Xxxxxxxx,
Esq.
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WorldWide
Stock Transfer, LLC
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By:
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Name:
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Title:
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EXHIBIT
I
FORM
OF NOTICE OF EFFECTIVENESS
OF REGISTRATION
STATEMENT
_________,
20__
________
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 its filing of a registration
statement covering the resale of certain shares (the “Conversion Shares”)
Company’s common stock, par value $.001 per share (the “Common Stock”) issued
upon the conversion of the secured convertible debenture purchased by YA Global
Investments, LP (the “Buyer”) pursuant to
that certain Securities Purchase Agreement, dated as of May _, 2010 (the “Securities Purchase
Agreement”), entered into by and among the Company and the
Buyer. On _______, 20__, 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 __________, 20__ and we have no knowledge 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
statement made herein that “we have no knowledge” is based solely on information
actually known to those attorneys currently practicing with this firm and
engaged in the representation of the Company in connection with the transactions
contemplated by the Securities Purchase Agreement.
Very
truly yours,
EXHIBIT
I
EXHIBIT
II
FORM OF
OPINION
VIA FACSIMILE AND REGULAR
MAIL
WorldWide
Stock Transfer, LLC
000
Xxxxxxxxxx Xxxxxx, Xxxxx L
Hackensack,
New Jersey 07601
RE: NEOMEDIA
TECHNOLOGIES, INC.
Ladies
and Gentlemen:
We have
acted as counsel to Neomedia Technologies, Inc., a Delaware corporation (the
“Company”), in
connection with the registration under the Securities Act of 1933, as amended
(the “Act”), of an offering of up to ____________ shares of the Company’s common
stock, par value $0.001 per share (the “Common Stock”), issued or to be issued
to the selling stockholders (the “Selling Stockholders”) listed in the selling
stockholders table at page __ of the final prospectus, a copy of which is
attached hereto as Exhibit A. We understand that the certificates
representing the Common Stock currently contain a legend (the “Securities Act
Legend”) stating that the Common Stock represented by such certificates may not
be sold or transferred without registration under the Act.
The sale
of the Common Stock by the Selling Stockholders has been registered under the
Act pursuant to a Registration Statement on Form S-1 (SEC File No. 333-______),
filed with the Securities and Exchange Commission (the “Commission”) on ________
__, 200_ (the “Registration Statement”). The Registration Statement
was declared effective under the Act by the Commission on ________ __,
200_. Therefore, the Common Stock identified in the Registration
Statement, including those shares issued upon exercise of the Convertible
Debentures and Warrants referenced in Exhibit A, may, upon receipt of
confirmation from the Selling Stockholder that the Common Stock has been or will
be sold only pursuant to the Registration Statement and that the Selling
Stockholder has complied, or will comply, with all applicable prospectus
delivery requirements, be issued or reissued, as applicable, without bearing the
Securities Act Legend.
Very
truly yours,
EXHIBIT
II
EXHIBIT
A
Prospectus
EXHIBIT A
