EXHIBIT 10.8
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IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
July 20, 2006
Fidelity Transfer Company
0000 X. Xxxx Xxxxxx - Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
RE: MM(2) GROUP, INC.
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Securities
Purchase Agreement (the "Securities Purchase Agreement") of even date herewith
by and between MM(2) GROUP, INC., a New Jersey 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, an the Buyers shall purchase from the Company, convertible debentures
(collectively, the "Debentures") in the aggregate principal amount of Two
Million Five Hundred Thousand Dollars ($2,500,000), plus accrued interest, which
are convertible into shares of the Company's common stock, no par value per
share (the "Common Stock"), at the Buyers discretion. The Company has also
issued to the Buyer on March 16, 2006 a warrant to purchase up to Twenty Million
(20,000,000) shares of Common Stock, at the Buyer's discretion and an amended
and restated warrant to purchase up to Seven Hundred Fifty Thousand (750,000)
shares of Common Stock, at the Buyer's discretion (collectively, the
"Warrants"). 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 20,750,000 shares of Common Stock to be issued to the Buyers
upon exercise of the Warrants (the "Warrant Shares").
3. The Company has agreed to issue to the Buyers 5,000,000 shares of
Common Stock pursuant to Section 4 of the Securities Purchase
Agreement.
This letter shall serve as our irrevocable authorization and direction
to Fidelity Transfer 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 Warrants, delivered to the Transfer Agent
by the Xxxxx Xxxxxxxx, Esq. (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
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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
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 Warrants), 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 213,675,214 Conversion Shares and 20,750,000
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 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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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.
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 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.
Notwithstanding anything to the contrary, the Company may issue Common Stock
issuable pursuant to the Company's obligations upon the conversion of stock
options, convertible debt or Class B Common Stock or the payment of legal fees
Xxxxxxxx X. Xxxxx, Esq.
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.
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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.
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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:
MM(2) GROUP, INC.
By:
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Name: Xxxx Xxxxxx
Title: President & CEO
Xxxxx Xxxxxxxx, Esq.
FIDELITY TRANSFER COMPANY
By:
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Name:
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Title:
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SCHEDULE I
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SCHEDULE OF BUYERS
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ADDRESS/FACSIMILE
NAME SIGNATURE NUMBER OF BUYERS
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Cornell Capital By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000
Partners, LP Its: General Partner Jersey City, NJ 07303
Facsimile: (000) 000-0000
By:
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Name: Xxxx Xxxxxx
Its: Portfolio Manager
SCHEDULE I-1
EXHIBIT I
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TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
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FORM OF NOTICE OF EFFECTIVENESS
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OF REGISTRATION STATEMENT
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_________, 2006
_________
Attention:
RE: MM(2) GROUP, INC.
Ladies and Gentlemen:
We are counsel to MM(2) GROUP, INC., (the "Company"), and have
represented the Company in connection with that certain Amended and Restated
Securities Purchase Agreement, dated as of July 20, 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 Two Million Five
Hundred Thousand Dollars ($2,500,000) of secured convertible debentures, which
shall be convertible into shares (the "Conversion Shares") of the Company's
Class A common stock, no par value 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 July 20, 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.
EXHIBIT I-1
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
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TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
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FORM OF OPINION
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____________ 2006
VIA FACSIMILE AND REGULAR MAIL
____________
Attention:
RE: MM(2) GROUP, INC.
Ladies and Gentlemen:
We have acted as special counsel to MM(2) GROUP, 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.
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
