EXHIBIT 10.3
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS, DATED SEPTEMBER 30, 2005.
TRANSFER AGENT INSTRUCTIONS
INKSURE TECHNOLOGIES INC.
September 30, 2005
Pacific Stock Transfer Company
000 X. Xxxx Xxxxxxx Xxxx, Xxx. 000
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx X. Xxxxx
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement, dated as
of September 30, 2005 (the "AGREEMENT"), by and among InkSure Technologies Inc.,
a Delaware corporation (the "COMPANY"), and the investors named on the Schedule
of Buyers attached thereto (collectively, the "HOLDERS"), pursuant to which the
Company is issuing to the Holders convertible notes (the "NOTES"), which are
convertible into shares of the common stock of the Company, $0.01 par value per
share (the "COMMON STOCK").
This letter shall serve as our authorization and direction to you (provided
that you are the transfer agent of the Company at such time) to issue shares of
Common Stock upon conversion of the Notes (the "CONVERSION SHARES") to or upon
the order of a Holder from time to time upon delivery to you of a properly
completed and duly executed Conversion Notice, in the form attached hereto as
EXHIBIT I, which has been acknowledged by the Company as indicated by the
signature of a duly authorized officer of the Company thereon, and the transfer
agent shall have no liability for relying on such instructions.
You acknowledge and agree that so long as you have previously received (a)
written confirmation from the Company that either (i) a registration statement
covering resales of the Conversion Shares has been declared effective by the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 ACT"), or (ii) that sales of the Conversion Shares may be
made in conformity with Rule 144 under the 1933 Act, and (b) if applicable, a
copy of such registration statement, then, within three (3) business days after
your receipt of a notice of transfer or Conversion Notice, you shall issue the
certificates representing the Conversion Shares and such certificates shall not
bear any legend restricting transfer of the Conversion Shares thereby and should
not be subject to any stop-transfer restriction; PROVIDED, HOWEVER, that if such
Conversion Shares are not registered for resale under the 1933 Act or able to be
sold under Rule 144, then the certificates for such 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 MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) A WRITTEN CONFIRMATION FROM THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE SECURITIES.
The Company hereby confirms that in the event that a stop order suspending
the effectiveness of a registration statement covering the resale of the
Conversion Shares has been issued by the SEC or any proceeding for that purpose
is threatened by the SEC, the Company will notify you promptly, in light of the
circumstances, of such order or notice. In addition, the Company shall promptly
inform you of any voluntary suspension of the effectiveness of such registration
statement and confirm the continued effectiveness of such registration statement
upon inquiry by you.
If for any reason you desire to resign as transfer agent of the Company,
you shall first provide the Company and the Holders with sixty (60) days prior
written notice (the "NOTICE PERIOD"). Notwithstanding the aforementioned, you
may resign as transfer agent to the Company and will be under no obligation to
continue to provide any issuance or transfer agent services as contemplated by
this letter if the Company is not current in all its outstanding payment
obligations for services provided by you during the Notice Period, PROVIDED,
HOWEVER, that the Holders, at their option, may pay for the costs associated
with any issuance of stock contemplated by the Agreement and this letter, and
you shall then continue to provide issuance and transfer agent services as
stipulated by this letter until the end of the Notice Period.
A form of written confirmation from the Company that a registration
statement covering resales of the Conversion Shares has been declared effective
by the SEC under the 1933 Act is attached hereto as EXHIBIT II.
2
Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at (000) 000-0000.
Very truly yours,
INKSURE TECHNOLOGIES INC.
By: _____________________
Name: Xxxx Xxxxxxx
Title: Chief Executive Officer
THE FOREGOING INSTRUCTIONS ARE
ACKNOWLEDGED AND AGREED TO
this __ day of September 2005
Pacific Stock Transfer Company
By: _________________________
Name: ___________________
Title: __________________
Enclosures
cc: Smithfield Fiduciary LLC
[Other Buyers]
Xxxxxxx X. Xxxxx, Esq.
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EXHIBIT I
INKSURE TECHNOLOGIES INC.
CONVERSION NOTICE
Reference is made to the Senior Secured Convertible Note (the "NOTE") issued to
the undersigned by INKSURE TECHNOLOGIES INC. (the "COMPANY"). In accordance with
and pursuant to the Note, the undersigned hereby elects to convert the
Conversion Amount (as defined in the Note) of the Note indicated below into
shares of Common Stock $0.01 par value per share (the "COMMON STOCK"), as of the
date specified below.
Date of Conversion: _______________________________________________________
Aggregate Conversion Amount to be converted: ______________________________
Please confirm the following information:
Conversion Price: _________________________________________________________
Number of shares of Common Stock to be issued: ____________________________
Please issue the Common Stock into which the Note is being converted in the
following name and to the following address:
Issue to: _________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Facsimile Number: _________________________________________________________
Authorization: ____________________________________________________________
By: ____________________________________________________________
Title: _______________________________________________________
Dated: _________________________________________________________________________
Account Number: ___________________________________________________________
(if electronic book entry transfer)
Transaction Code Number: __________________________________________________
(if electronic book entry transfer)
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ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby directs
Pacific Stock Transfer Company to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions dated September
30, 2005 from the Company and acknowledged and agreed to by Pacific Stock
Transfer Company.
INKSURE TECHNOLOGIES INC.
By: ____________________
Name:
Title:
5
EXHIBIT II
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
Pacific Stock Transfer Company
000 X. Xxxx Xxxxxxx Xxxx, Xxx. 000
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Re: InkSure Technologies Inc.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT") by and among InkSure Technologies Inc., a
Delaware corporation, (the "Company") and the buyers named therein
(collectively, the "HOLDERS"), pursuant to which the Company issued to the
Holders senior secured convertible notes (the "NOTES") convertible into the
Company's common stock, $0.01 par value per share (the "COMMON STOCK"), and that
certain Registration Rights Agreement by and among the Company and the Holders
(the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Notes and the shares of Common Stock, under the
Securities Act of 1933, as amended (the "1933 ACT"). In connection with the
Company's obligations under the Registration Rights Agreement, on ____________
___, 200_, the Company filed a Registration Statement on Form SB-2 (File No.
333-_____________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling shareholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised our counsel by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] 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 Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
This letter shall serve as our notice to you that the shares of Common
Stock are freely transferable by the Holders pursuant to the Registration
Statement. You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Holders as
contemplated by the Company's Irrevocable Transfer Agent Instructions dated
September 30, 2005.
This letter shall serve as our standing notice with regard to this matter.
Very truly yours,
INKSURE TECHNOLOGIES INC.
By: ____________________
Name:
Title:
CC: [LIST NAMES OF HOLDERS]
