EXHIBIT 10.16
TRANSFER AGENT INSTRUCTIONS
November 12, 2001
Computer Share Trust Company, Inc.
00000 Xxxx Xxxxxxx Xxxxxxx, Xxxxx X-0
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
RE: TORQUE ENGINEERING CORPORATION
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT"), dated as of October 28, 2001, by and between
Torque Engineering Corporation, a Delaware corporation (the "COMPANY"), and the
Buyers listed on Schedule I attached thereto (individually a "BUYER" and
collectively the "BUYERS"), pursuant to which the Company shall sell to the
Buyers Three Hundred Thousand Dollars ($300,000) of the Company's convertible
debentures, which shall be convertible into shares of the Company's common
stock, par value $0.00001 per share (the "COMMON STOCK"). The shares of Common
Stock to be converted thereunder are referred to herein as, the "CONVERSION
SHARES." This letter shall serve as our irrevocable authorization and direction
to you (provided that you are the transfer agent of the Company at such time) to
issue the Conversion Shares to the Buyers from time to time upon surrender to
you of a properly completed and duly executed Conversion Notice, in the form
attached hereto as Exhibit I, and a Company Confirmation of Conversion Notice
delivered on behalf of the Company by Xxxxx Xxxxxxxx, Esq., in the form attached
hereto as Exhibit II.
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, send, via facsimile, a
Company Confirmation of Conversion Notice to the Buyers and to you, which
confirmation shall constitute an irrevocable instruction to you to process such
Conversion Notice in accordance with the terms of these instructions and the
Company Confirmation of Conversion Notice. Upon your receipt of a copy of the
executed Conversion Notice and a copy of the applicable Company Confirmation of
Conversion Notice, you shall use your best efforts to, within two (2) Trading
Days following the date of receipt of the Company Confirmation of 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 Company Confirmation of
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 Buyers 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 the Company counsel delivers (i) the Notice of
Effectiveness set forth in Exhibit III attached hereto and (ii) an opinion of
counsel in the form set forth in Exhibit IV attached hereto, 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 to you and the Buyers 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 Computer Share Trust Company, Inc. as the Company's transfer agent
without the prior written consent of Cornell Capital Partners, LP.
The Company and Computer Share Trust Company, Inc. acknowledge that the
Buyers are relying on the representations and covenants made by the Company and
Computer Share Trust Company, Inc. hereunder and are a material inducement to
the Buyers purchasing convertible debentures under the Securities Purchase
Agreement. The Company and Computer Share Trust Company, Inc. further
acknowledge that without such representations and covenants of the Company and
Computer Share Trust Company, Inc. made hereunder, the Buyers would not enter
into the Securities Purchase Agreement and purchase convertible debentures
pursuant thereto.
* * * * *
2
IN WITNESS WHEREOF, the parties have caused this letter agreement
regarding Transfer Agent Instructions to be duly executed and delivered as of
the date first written above.
THE COMPANY:
TORQUE ENGINEERING CORPORATION
By: /s/ Xxxxxxx Xxxxx
-----------------
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Portfolio Manager
/s/ Xxxxx Xxxxxxxx, Esq.
------------------------
XXXXX XXXXXXXX, ESQ.
ACKNOWLEDGED AND AGREED:
COMPUTER SHARE TRUST COMPANY, INC.
By:/s/ Xxxxx Xxxxxxxx
------------------
Name: Xxxxx Xxxxxxxx
Title:Vice President
3
EXHIBIT I
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TO TRANSFER AGENT INSTRUCTIONS
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FORM OF CONVERSION NOTICE
Reference is made to the Securities Purchase Agreement (the "SECURITIES
PURCHASE AGREEMENT") between Torque Engineering Corporation (the "COMPANY") and
the Buyers listed on Schedule I attached thereto, dated November 9, 2001. 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 $0.00001 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: $_________________________________
Please confirm the following information:
Conversion Price per share: $_________________________________
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
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TO TRANSFER AGENT INSTRUCTIONS
------------------------------
FORM OF COMPANY CONFIRMATION OF CONVERSION NOTICE
Reference is made to the Securities Purchase Agreement (the "SECURITIES
PURCHASE AGREEMENT") between Torque Engineering Corporation (the "COMPANY") and
the Buyers listed on Schedule I attached thereto, dated November 9, 2001. In
accordance with and pursuant to the Securities Purchase Agreement, the
undersigned hereby confirms and authorizes the issuance of shares of common
stock, par value $0.00001 per share (the "COMMON STOCK") of the Company, in
connection with the Conversion Notice (as defined in the Securities Purchase
Agreement) attached hereto. Specifically, the Company hereby confirms the
following information:
Conversion Date: __________________________________
Amount to be converted: __________________________________
Conversion Price per share: $_________________________________
Number of shares of Common
Stock to be issued: __________________________________
The shares of Common Stock shall be issued in the name and to the address as set
forth in the applicable Conversion Notice.
Authorized Signature __________________________________
Name:_____________________________
Title:____________________________
Phone #:__________________________
Fax #:____________________________
EXHIBIT III
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TO TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
________ __, 2001
Computer Share Trust Company, Inc.
00000 Xxxx Xxxxxxx Xxxxxxx, Xxxxx X-0
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
RE: TORQUE ENGINEERING CORPORATION
Ladies and Gentlemen:
We are counsel to Torque Engineering Corporation, a Delaware corporation
(the "COMPANY"), and have represented the Company in connection with that
certain Securities Purchase Agreement, dated as of November 9, 2001 (the
"SECURITIES PURCHASE AGREEMENT"), entered into by and among the Company and the
Buyers listed on Schedule I thereto (individually a "BUYER" and collectively the
"BUYERS") pursuant to which the Company has agreed to sell to the Buyers Three
Hundred Thousand Dollars ($300,000.00) of convertible debentures, which shall be
convertible into shares (the "CONVERSION SHARES") of the Company's common stock,
par value $0.00001 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 November 9, 2001, with the Buyers (the "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 _______, 2001, 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
__________, 2001 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 have 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:____________________
EXHIBIT IV
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TO TRANSFER AGENT INSTRUCTIONS
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FORM OF OPINION
---------------
____________ ___, 2001
VIA FACSIMILE AND REGULAR MAIL
Computer Share Trust Company, Inc.
00000 Xxxx Xxxxxxx Xxxxxxx, Xxxxx X-0
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Re: TORQUE ENGINEERING CORPORATION
Ladies and Gentlemen:
We have acted as special counsel to Torque Engineering Corporation (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 S-___, as amended (the "REGISTRATION STATEMENT"),
filed by the Company with the SEC on _________ ___, 2001. 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
__________ ___, 2001.
We understand that the Selling Stockholders acquired, or will acquire, 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.
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 Computer Share Trust Company, Inc. 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 you specifically in connection with the issuance of
the Shares, and solely for your information and benefit. This letter may not be
relied upon by you 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,
XXXXXXXXXXX & XXXXXXXX LLP
cc: Xx. Xxxxxxx Xxxxx
EXHIBIT "A"
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(LIST OF SELLING STOCKHOLDERS)
NAME: NO. OF SHARES:
