EXHIBIT 10.12
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
May ___, 2002
Atlas Stock Transfer
0000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
RE: COINLESS SYSTEMS INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT"), dated as of May ___, 2002, by and between
Coinless Systems 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 up to Two Hundred Fifty Thousand
Dollars ($250,000) of the Company's 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 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 Buyer 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, 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, send, 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. 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 the Company counsel 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 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 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 Atlas Stock Transfer as the Company's transfer agent without the prior
written consent of the Buyer.
Any attempt by you to resign as transfer agent hereunder shall not be
effective until such time as the Company provides to you written notice that a
suitable replacement has agreed to serve as transfer agent and to be bound by
the terms and conditions of these Transfer Agent Instructions.
The Company and Atlas Stock Transfer acknowledge that the Buyer is relying
on the representations and covenants made by the Company hereunder and are a
material inducement to the Buyer purchasing convertible debentures under the
Securities Purchase Agreement. The Company and Atlas Stock Transfer further
acknowledge that without such representations and covenants of the Company and
Atlas Stock Transfer 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 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 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 Transfer Agent Instructions.
* * * * *
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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.
COMPANY:
COINLESS SYSTEMS INC.
By:
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Name: Xxxxxx X. Xxxxxxxx
Title: President and CEO
CORNELL CAPITAL PARTNERS, LP
BY: YORKVILLE ADVISORS, LLC
ITS: GENERAL PARTNER
By:
---------------------------
Name: Xxxx X. Xxxxxx
Title: Portfolio Manager
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XXXXX XXXXXXXX, ESQ.
ACKNOWLEDGED AND AGREED:
By:
---------------------------------
Name:
-------------------------------
Title:
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EXHIBIT I
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TO TRANSFER AGENT INSTRUCTIONS
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FORM OF CONVERSION NOTICE
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Reference is made to the Securities Purchase Agreement (the "SECURITIES
PURCHASE AGREEMENT") between Coinless Systems Inc. (the "COMPANY"), and Cornell
Capital Partners, LP, dated May ___, 2002. 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: $ ____________________________
Amount of Debenture unconverted: $ _____________________________
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.
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EXHIBIT II
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TO TRANSFER AGENT INSTRUCTIONS
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FORM OF NOTICE OF EFFECTIVENESS
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OF REGISTRATION STATEMENT
-------------------------
May __, 2002
Atlas Stock Transfer
0000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
RE: COINLESS SYSTEMS INC.
Ladies and Gentlemen:
We are counsel to Coinless Systems Inc., a Nevada corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Securities Purchase Agreement, dated as of May ___, 2002 (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 up to Two Hundred Fifty
Thousand Dollars ($250,000) of 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 May ___, 2002, with the Buyer (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 _______, 2002, 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 __________, 2002 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.
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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,
XXXXXXXXXXX & XXXXXXXX LLP
By:
---------------------------------
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EXHIBIT III
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TO TRANSFER AGENT INSTRUCTIONS
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FORM OF OPINION
---------------
____________ ___, 2002
VIA FACSIMILE AND REGULAR MAIL
------------------------------
Atlas Stock Transfer
0000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Re: COINLESS SYSTEMS INC.
---------------------
Ladies and Gentlemen:
We have acted as special counsel to Coinless Systems 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 _________ ___, 2002. 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
__________ ___, 2002.
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.
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 Atlas Stock Transfer 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.
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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
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EXHIBIT "A"
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(LIST OF SELLING STOCKHOLDERS)
NAME: NO. OF SHARES:
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