IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
April 1, 2005
Atlas Stock Transfer Corp.
0000 X. Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: Xxx Xxxx
RE: DIRECTVIEW, INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement") of even date herewith by and between
DirectView, Inc., a Nevada corporation (the "Company"), and the Buyers set forth
on Schedule I attached thereto (collectively the "Buyers") and that certain
Pledge and Escrow Agreement (the "Pledge Agreement") of even date herewith among
the Company, the Buyers and Xxxxx Xxxxxxxx, as escrow agent (the "Escrow
Agent"). 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
One Million Dollars ($1,000,000), plus accrued interest, which are convertible
into shares of the Company's common stock, par value $0.0001 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 up to 41,666,667
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. The Company has issued 250,000,000 shares of Common Stock (the
"Escrowed Shares") in the Company's name that have been or are
being delivered to the Escrow Agent pursuant to the Pledge
Agreement.
This letter shall serve as our irrevocable authorization and direction to Atlas
Stock Transfer Corp. (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 hereto as
Exhibit I, delivered on behalf of the Company to the Transfer Agent by 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 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 Interest 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 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.
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 a Conversion 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. Escrowed Shares.
a. With respect to the Escrowed Shares, upon an event of default as set
forth in the Pledge Agreement, the Escrow Agent shall send written notice to the
Transfer Agent ("Escrow Notice"), with a copy to the Company, to transfer such
number of Escrow Shares as set forth in the Escrow Notice to the Buyers. Upon
receipt of an Escrow Notice, the Transfer Agent shall promptly transfer such
number of Escrow Shares to the Buyers as shall be set forth in the Escrow Notice
delivered to the Transfer Agent by the Escrow Agent. If the Escrow Shares are
not registered for sale under the Securities Act of 1933, as amended, then the
certificates for the Escrow Shares shall bear restrictive legend described in
paragraph 1(d), above.
3. All Shares.
a. The Transfer Agent shall reserve for issuance to the Buyers the
Conversion Shares and the Escrowed 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 Escrow Notice and shall have no liability for relying on such instructions.
Any Conversion Notice or Escrow 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.
The Company hereby confirms and the Transfer Agent acknowledges that
while any portion of the Debenture remains unpaid and unconverted with the
exception Common Stock issuable to Cornell Capital Partners, LP pursuant to the
Standby Equity Distribution Agreement, 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
its fair market value 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 fair market value determined immediately prior to its issuance, (iii)
issue any S-8 shares of the Company's Common Stock except to register up to
20,000,000 shares of the Common Stock to be issued under a stock incentive plan
to the Company's non-executive employees, provided that (x) such shares are not
issued without consideration or for a consideration less than the Common Stock's
closing Bid Price on the date of issuance, and (y) such Form S-8 registration
statement is not filed prior to 90 days following the effectiveness of the
registration statement covering resale of the Conversion Shares and Interest
Shares.
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 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]
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:
DIRECTVIEW, INC.
By:
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
Xxxxx Xxxxxxxx, Esq.
ATLAS STOCK TRANSFER CORP.
By: /s/ Xxx Xxxx
Name: Xxx Xxxx
Title:
SCHEDULE I
SCHEDULE OF BUYERS
Address/Facsimile
Name Signature Number of Buyers
Highgate House Funds, Ltd By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxx: Xxxxxxx Xxxxxxx Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
By:
Name: Xxxx Xxxxxx
Its: Portfolio Manager
EXHIBIT I
TO
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF CONVERSION NOTICE
Reference is made to the Securities Purchase Agreement (the "Securities
Purchase Agreement") between DirectView, Inc., (the "Company"), and the Buyers
set forth on Schedule I attached thereto dated April 1, 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 $0.0001
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:
Amount of Liquidated Damages: $
Conversion Price of Liquidated Damages: $
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:
Phone #:
Broker DTC Participant Code:
Account Number*:
* Note that receiving broker must initiate transaction on
DWAC System.
EXHIBIT II-2
EXHIBIT II-1
EXHIBIT II
TO
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
_________, 2005
--------
Attention:
RE: DIRECTVIEW, INC.
Ladies and Gentlemen:
We are counsel to DirectView, Inc., (the "Company"), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of April 1, 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 up to One Million Dollars ($1,000,000) of secured
convertible debentures, which shall be convertible into shares (the "Conversion
Shares") of the Company's common stock, par value $0.0001 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 April 1, 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 _______, 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.
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:
------------------
EXHIBIT III
TO
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 2005
VIA FACSIMILE AND REGULAR MAIL
--------
Attention:
RE: DIRECTVIEW, INC.
Ladies and Gentlemen:
We have acted as special counsel to DirectView, 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 __________ ___, 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 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 ________ 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-1
EXHIBIT "A"
(LIST OF SELLING STOCKHOLDERS)
Name: No of Shares:
