IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
December 13, 2004
Continental Stock Transfer & Trust Company
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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 "BUYER"),
pursuant to which the Company shall sell to the Buyer a minimum of One Million
Dollars ($1,000,000) of the Company's secured convertible debentures (the
"Convertible Debentures"), which shall be convertible into shares of the
Company's common stock, par value $0.001 per share (the "COMMON STOCK"). The
shares of Common Stock to be issued upon conversion of the Convertible
Debentures, and to be issued pursuant to the Securities Purchase Agreement,
including, without limitation, any principal, interest or Liquidated Damages are
referred to as "CONVERSION SHARES." Such Conversion Shares shall also be deemed
to include any Common Stock issued for Liquidated Damages under the Investor
Registration Rights Agreement of even date herewith between the Company and the
Buyer. This letter shall serve as our irrevocable authorization and direction to
you (provided you are the transfer agent of the Common Stock at such time) to
issue the Conversion Shares in the event the Buyer has elected to convert all or
any portion of the Convertible Debentures, including, without limitation,
principal, interest or Liquidated Damages upon surrender to you of a properly
completed and duly executed Conversion Notice, in the form attached hereto as
EXHIBIT I, delivered on behalf of the Company by Xxxxx Xxxxxxxx, Esq.
Specifically, upon receipt by the Company or Xxxxx Xxxxxxxx, Esq. of a
copy of a Conversion Notice, Xxxxx Xxxxxxxx, Esq., on behalf of the Company,
shall as soon as practicable, but in no event later than one (1) Trading Day (as
defined below) after receipt of such Conversion Notice, sent to you, via
facsimile, a Conversion Notice, which shall constitute an irrevocable
instruction to you to process such Conversion Notice in accordance with the
terms of these instructions. Assuming you are acting as transfer agent for the
Company, upon your receipt of a copy of the executed Conversion Notice, you
shall use your best efforts to, within three (3) Trading Days following the date
of receipt of the Conversion Notice, (A) 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 Buyer or its designee, for the number
of shares of Common Stock to which the Buyer shall be entitled as set forth in
the Conversion Notice or (B) provided you are 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 designee's 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. ("TRADING DAY" shall
mean any day on which the Nasdaq Market is open for customary trading.)
The Company hereby confirms to you and the Buyer that certificates
representing the Conversion Shares shall not bear any legend restricting
transfer of the Conversion Shares thereby 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 (a) the Company counsel delivers
(i) the Notice of Effectiveness substantially in the form set forth in EXHIBIT
II attached hereto, (ii) an opinion of counsel substantially in the form set
forth in Exhibit III attached hereto, and (iii) the Buyer or its broker
represent and warrant to you, in writing, that it has complied with the
prospectus delivery requirements, and that if the Conversion Shares are not
registered for sale under the Securities Act of 1933, as amended, then the
certificates for the Conversion 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."
The Company hereby confirms and Continental Stock Transfer & Trust
Company ("CST") acknowledges that in the event Counsel to the Company does not
issue an opinion of counsel as required in accordance with the preceding
paragraph to issue the Conversion Shares free of legend the Company authorizes
and CST will accept an opinion of Counsel from Xxxxx Xxxxxxxx, Esq..
The Company hereby confirms to you and the Buyer that no instructions
other than as contemplated herein will be given to you by the Company with
respect to the Conversion Shares. The Company hereby agrees that it shall not
replace CST as the Company's transfer agent without the prior written consent of
the Buyer and except as set forth in the following paragraph.
Any attempt by CST to resign as transfer agent hereunder upon less than
fifteen (15) days written notice to the Company and the Buyer shall not be
effective until the expiration of such fifteen (15) day period.
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The Company and CST hereby acknowledge and confirm that complying with
the terms of this Agreement shall be deemed to comply with, and shall not be
deemed to violate, any responsibilities and duties owed by CST to the Company.
The Company and CST acknowledge that the Buyer is relying on the
representations and covenants made by the Company and CST hereunder and are a
material inducement to the Buyer purchasing Convertible Debentures under the
Securities Purchase Agreement. The Company and CST further acknowledge that
without such representations and covenants of the Company and CST made
hereunder, the Buyer would not enter into the Securities Purchase Agreement and
purchase Convertible Debentures pursuant thereto.
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 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 any other rights or remedies it may have, 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.
* * * * *
3
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
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Name: Xxxxx Xxxxxx
Title: President & CEO
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
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Title: CEO
---------------------------------
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SCHEDULE I
SCHEDULE OF BUYERS
ADDRESS/FACSIMILE
NAME SIGNATURE NUMBER OF BUYER
----------------------------- --------------------------------- ------------------------------
Highgate House, LP By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxx: Xxxxxxx Xxxxxxx Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
By:
-----------------------------
Name: Xxxx X. Xxxxxx
Its: Portfolio Manager
Xxxxxxxxxx Equity Partners, LP By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxx: Xxxxxxx Xxxxxxx Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
By:
-----------------------------
Name: Xxxx X. Xxxxxx
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 ____ 2004.
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:
----------------------
Amount of Liquidated Damages: $
---------------------
Conversion Price of Liquidated Damages: $
---------------------
Shares of Common Stock Issuable:
----------------------
Total Number of shares of Common Stock to be issued:
----------------------
EXHIBIT I-1
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.
2
EXHIBIT II
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
_________, 2004
---------------
------------------------------
---------------
Attention:
RE: NANOSCIENCE TECHNOLOGIES, INC.
Ladies and Gentlemen:
We are counsel to Nanoscience Technologies, Inc., a Nevada corporation
(the "COMPANY"), and have represented the Company in connection with that
certain Securities Purchase Agreement, dated as of December __, 2004 (the
"SECURITIES PURCHASE AGREEMENT"), entered into by and among the Company and the
Buyers set forth on Schedule I attached thereto (collectively the "BUYER")
pursuant to which the Company has agreed to sell to the Buyer a minimum of 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 $0.001 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 December __, 2004, with the Buyer (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 December __, 2004,
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 you 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 5:00 P.M.
on __________, 2004 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 II-1
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.
Very truly yours,
[COMPANY COUNSEL]
By:
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EXHIBIT II-2
EXHIBIT III
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 2004
_________________ Transfer Co.
[ADD ADDRESS]_________________
Attention: Compliance Department
Re: NANOSCIENCE TECHNOLOGIES, INC.
Ladies and Gentlemen:
Nanoscience Technologies, Inc., a Nevada corporation (the "Company"),
has filed with the Securities and Exchange Commission a Registration Statement
on Form S-_, file no. 333-_________ (the "Registration Statement"), which became
effective under the Securities Act of 1933, as amended (the "Act"), on
______________, 2004. The Registration Statement and the related prospectus
relates to up to ________________ shares of common stock, $0.001 par value, of
the Company (the "Common Stock"), which may be sold by the stockholders listed
on Exhibit A to this opinion (the "Sellers").
Unless we advise you otherwise, upon your receipt of appropriate
written representations from the broker-dealers acting for the Sellers to the
effect that (i) the number of shares of Common Stock sold by them (limited to
the number listed opposite their respective names in Exhibit A attached hereto)
have been sold pursuant to the Registration Statement and (ii) they have
delivered a copy of the Company's prospectus dated __________, 2004 to the
purchasers of such shares of Common Stock, you may issue certificates
representing such shares in the names of the transferees of the Sellers without
legend regarding restrictions on transfer under the Act and remove all stop
transfer orders with respect to the sold shares with respect to restrictions on
transfer under the Act.
This letter is for your benefit only with respect to the matters as set
forth above and may not be relied upon by any other person or for any other
purpose.
Very truly yours,
EXHIBIT III-1
EXHIBIT "A"
(LIST OF SELLING STOCKHOLDERS)
NAME: NO. OF SHARES:
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EXHIBIT A-1
