IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
April 24, 2006
Corporate Stock Transfer, Inc.
0000 Xxxxxx Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
RE: EYI INDUSTRIES, INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement") of even date herewith by and between EYI
Industries, Inc., a Nevada 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 Four Million Five Hundred
Thousand Dollars ($4,500,000), plus accrued interest, which are convertible into
shares of the Company's common stock, par value $0.001 per share (the "Common
Stock"), at the Buyers discretion. The Company has also issued to the Buyer
warrants to purchase up to 124,062,678 shares of Common Stock, at the Buyer's
discretion (the "Warrant"). 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 124,062,678 shares of Common Stock to be issued to the Buyers upon
exercise of the Warrant (the "Warrant Shares").
This letter shall serve as our irrevocable authorization and direction to
Corporate Stock Transfer, Inc. (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 Warrant, delivered to the Transfer
Agent by 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 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. 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 Warrant), 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 615,663,401 Conversion Shares and 124,062,678 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.
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.
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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 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.
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.
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:
EYI INDUSTRIES, INC.
By: /s/ Xxx Xxxxxxxx
-------------------------------------
Name: Xxx Xxxxxxxx
Title: President & CEO
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx, Esq.
CORPORATE STOCK TRANSFER
By: Xxxxxxx Xxxx
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Name: Xxxxxxx Xxxx
-----------------------------------
Title: President
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SCHEDULE I
SCHEDULE OF BUYERS
Address/Facsimile Amount of
Name Signature Number of Buyer Subscription
---- --------- --------------- ------------
Cornell Capital Partners, LP By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000 $2,250,000
Its: General Partner Jersey City, NJ 07303
Facsimile: (000) 000-0000
By:
Name: Xxxx Xxxxxx
Its: Portfolio Manager
With a copy to: Xxxxx Xxxxxxxx, Esq. 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Facsimile: (201)
985-8266
TAIB Bank, B.S.C. (c) By: ___________________ 000 Xxxx Xxxxxx $1,250,000
c/o TAIB Securities, Inc. Name: Xxxxx Xxxxxxx New York, NY 10022
Certain Wealth, Ltd. By: ____________________ 000 Xxxx Xxxxxx $1,000,000
c/o TAIB Securities, Inc. Name: Xxxxx Xxxxxxx New York, NY 10022
SCHEDULE I-1
EXHIBIT I
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
_________, 2006
--------
Attention:
RE: EYI INDUSTRIES, INC.
Ladies and Gentlemen:
We are counsel to EYI Industries, Inc., (the "Company"), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of April __, 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 Four Million Five Hundred Thousand Dollars
($4,500,000) of secured convertible debentures, which shall be convertible into
shares (the "Conversion Shares") of the Company's common stock, par value $.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 April ___,
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
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 2006
VIA FACSIMILE AND REGULAR MAIL
--------
Attention:
RE: EYI INDUSTRIES, INC.
Ladies and Gentlemen:
We have acted as special counsel to EYI Industries, 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
