EXHIBIT 10.11
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
November 10, 2005
Continental Stock Transfer & Trust Company
00 Xxxxxxx Xxxxx - 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
RE: NS8 CORPORATION
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement") of even date herewith by and between NS8
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Corporation, a Delaware corporation (the "Company"), and the Buyers set forth on
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Schedule I attached thereto (collectively the "Buyers") and that certain Pledge
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and Escrow Agreement (the "Pledge Agreement") of even date herewith among the
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Company, the Buyers and Xxxxx Xxxxxxxx, as escrow agent (the "Escrow Agent") and
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that certain Warrant of even date herewith between the Company and the Buyers
(the "Warrant"). Pursuant to the Securities Purchase Agreement, the Company
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shall sell to the Buyers, an the Buyers shall purchase from the Company,
convertible debentures (collectively, the "Debentures") in the aggregate
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principal amount of One Million Eight Hundred Sixty Three Thousand Four Hundred
Thirty Dollars ($3,163,430), plus accrued interest, which are convertible into
shares of the Company's common stock, par value $0.0001 per share (the "Common
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Stock"), at the Buyers discretion. These instructions relate to the following
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stock or proposed stock issuances or transfers:
1. The Company has agreed to issue to the Buyers up to 350,000,000 shares of
the Company's Common Stock upon conversion of the Debentures ("Conversion
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Shares") plus the shares of Common Stock to be issued to the Buyers upon
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conversion of accrued interest and liquidated damages into Common Stock (the
"Interest Shares")
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2. The Company has agreed to issue to the Buyers up to 25,000,000 shares
(the "Warrant Shares") of the Company's Common Stock upon exercise of the
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Warrant.
EX-149
3. The Company has prepared, or will promptly prepare, stock certificates
representing 14,917,947 shares (the "Escrowed Shares") of the Company's Common
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Stock, in the Company's name, that have been or are being delivered to the
Escrow Agent pursuant to the Pledge Agreement.
This letter shall serve as our irrevocable authorization and direction to
Continental Stock Transfer & Trust Company (the "Transfer Agent") (provided that
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you are acting as the Trasfer Agent of the Company at such time) 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
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form attached hereto as Exhibit I, or a properly completed Exercise Notice in
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the form attached to the Warrant as Exhibit A thereto (the "Exercise Notice"),
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delivered on behalf of the Company to the Transfer Agent by Xxxxx Xxxxxxxx, Esq.
(the "Escrow Agent"). Upon receipt of a Conversion Notice or an Exercise
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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 Buyers or their designees, for the number of
shares of Common Stock to which the Buyers shall be entitled as set forth in the
Conversion Notice or Exercise Notice or (ii) provided Transfer Agent are
participating in The Depository Trust Company ("DTC") Fast Automated Securities
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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 Buyers'
or their designees' balance account with DTC through its Deposit Withdrawal At
Custodian ("DWAC") system provided the Buyers causes its bank or broker to
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initiate the DWAC transaction. For purposes hereof "Trading Day" shall mean any
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day on which the NASDAQ Market is open for customary trading.
b. The Company hereby confirms to the Transfer Agent and the Buyers that
certificates representing the Conversion Shares and 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 II attached hereto and (ii)
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an opinion of counsel in the form set forth in Exhibit III attached hereto, and
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that if the Conversion Shares, Warrant Shares and the Interest Shares are not
registered for sale under the Securities Act of 1933, as amended (the "Act"),
and the Transfer Agent has received an opinion of counsel to the Company that
the issuance of the Conversion Shares and the Interest Shares is an exempt
transaction under the Act, then the certificates for the Conversion Shares,
Warrant Shares and Interest Shares shall bear the following legend:
EX-150
"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."
c. In the event that counsel to the Company fails or refuses to render an
opinion as required to issue the Conversion Shares in accordance with the
preceding paragraph (either with or without restrictive legends, as applicable),
then the Company irrevocably and expressly authorizes Xxxxx Xxxxxxxx, Esq. 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 substantially in the form attached as
an exhibit to the Debentures or instructions to exercise the Warrant, the Escrow
Agent shall, within one (1) Trading Day thereafter, send to the Transfer Agent a
Conversion Notice in the form attached hereto as Exhibit I, or an Exercise
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Notice, 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. Escrowed Shares.
a. With respect to the Escrowed Shares, upon an event of default as set
forth in the Pledge Agreement, the Escrow Agent shall send written notice to the
Transfer Agent ("Escrow Notice") to transfer such number of Escrow Shares as set
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forth in the Escrow Notice to the Buyers. Upon receipt of an Escrow Notice and
the Escrow Shares properly endorsed for transfer accompanied by an opinion of
counsel the Transfer Agent shall promptly transfer such number of Escrow Shares
to the Buyers as shall be set forth in the Escrow Notice delivered to the
Transfer Agent by the Escrow Agent. Further, the Transfer Agent shall promptly
transfer such shares from the Buyers to any subsequent transferee promptly upon
receipt of written notice from the Buyers or their counsel. If the Escrow
Shares are not registered for sale under the Securities Act of 1933, as amended,
then the certificates for the Escrow Shares shall bear the legend set forth in
Section 1b.
EX-151
b. In the event that counsel to the Company fails or refuses to render an
opinion as may be required by the Transfer Agent to affect a transfer of the
Escrow Shares (either with or without restrictive legends, as applicable), then
the Company irrevocably and expressly authorizes Xxxxx Xxxxxxxx, Esq. to render
such opinion. The Transfer Agent shall accept and be entitles to rely on such
opinion for the purpose of transferring the Escrow Shares.
3. All Shares.
a. The Transfer Agent shall reserve for issuance to the Buyers the
Conversion Shares, the Escrowed Shares and 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 Transfer Agent shall rely exclusively on the Conversion Notice, the
Escrow Notice or the Exercise Notice and shall have no liability for relying on
such instructions. Any Conversion Notice, Escrow 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.
c. 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.
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.
The Company hereby confirms to Continental Stock and the Investor that no
instructions other than as contemplated herein will be given to Continental
Stock by the Company with respect to the shares of Common Stock. Such shares of
Common Stock shall remain in reserve with Continental Stock until the Company
and the Investor mutually provide Continental Stock instructions that the shares
of Common Stock may be removed from the reserve The Company hereby agrees that
it shall not replace Continental Stock as the Company's transfer agent during
the term of this Agreement without the prior written consent of the Investor.
EX-152
Should Continental Stock resign as transfer agent, the Company shall use
its best efforts to obtain a suitable replacement transfer agent which agent
shall have agreed to serve as transfer agent and to be bound by the terms and
conditions of these Transfer Agent Instructions within the Notice Period
referenced above. The Company's obligation to obtain a suitable replacement
transfer agent shall not affect Continental Stock's ability to resign.
The Company hereby acknowledge and confirm that complying with the terms of
this Agreement does not and shall not prohibit Continental Stock from satisfying
any and all responsibilities and duties it may owe to the Company.
The Company acknowledges that the Buyers are relying on the representations
and covenants made by the Company hereunder and are a material inducement to the
Buyers purchasing convertible debentures under the Securities Purchase
Agreement. The Company further acknowledges that without such representations
and covenants of the Company made hereunder, the Buyers would not purchase the
Debentures.
The Company 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 Transfer Agent Instructions.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK]
EX-153
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:
NS8 CORPORATION
By: /s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: CEO
/s/ Xxxxx Xxxxxxxx, Esq.
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Xxxxx Xxxxxxxx, Esq.
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
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Title: Vice President
EX-154
SCHEDULE I
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SCHEDULE OF BUYERS
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Address/Facsimile
Name Signature Number of Buyers
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Cornell Capital Partners, LP By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxx: Xxxxxxx Xxxxxxx Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Its: Portfolio Manager
EX-155
EXHIBIT I
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TO IRREVOCABLE 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
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Purchase Agreement") between NS8 Corporation, (the "Company"), and the Buyers
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set forth on Schedule I attached thereto dated November ____ 2005. 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 $0.0001 per share (the "Common Stock"), of the Company
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for the amount indicated below as of the date specified below.
Conversion Date:
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Amount to be converted: $
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Conversion Price: $
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Shares of Common Stock Issuable:
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Amount of Debenture unconverted: $
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Amount of Interest Converted: $
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Conversion Price of Interest: $
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Shares of Common Stock Issuable:
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Amount of Liquidated Damages: $
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Conversion Price of Liquidated Damages: $
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Shares of Common Stock Issuable:
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Total Number of shares of Common Stock to be issued:
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Please issue the shares of Common Stock in the following name and to the
following address:
Issue to:
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Authorized Signature:
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Name:
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Title:
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Phone #:
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Broker DTC Participant Code:
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Account Number*:
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* Note that receiving broker must initiate transaction on DWAC System.
EX-157
EXHIBIT II
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TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
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FORM OF NOTICE OF EFFECTIVENESS
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OF REGISTRATION STATEMENT
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_________, 2005
________
Attention:
RE: NS8 CORPORATION
Ladies and Gentlemen:
We are counsel to NS8 Corporation, (the "Company"), and have represented
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the Company in connection with that certain Securities Purchase Agreement, dated
as of November __, 2005 (the "Securities Purchase Agreement"), entered into by
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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
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the Buyers up to One Million Eight Hundred Sixty Three Thousand Four Hundred
Thirty Dollars ($3,163,430) of secured convertible debentures, which shall be
convertible into shares (the "Conversion Shares") of the Company's common stock,
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par value $0.0001 per share (the "Common Stock"), in accordance with the terms
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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 ___, 2005, with the Buyers (the "Investor Registration
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Rights Agreement") pursuant to which the Company agreed, among other things, to
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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
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Purchase Agreement and the Registration Rights Agreement, on _______, 2005, the
Company filed a Registration Statement (File No. ___-_________) (the
"Registration Statement") with the Securities and Exchange Commission (the
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"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 __________, 2005 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.
EX-158
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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EX-159
EXHIBIT III
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TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
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FORM OF OPINION
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________________ 2005
VIA FACSIMILE AND REGULAR MAIL
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________
Attention:
RE: NS8 CORPORATION
Ladies and Gentlemen:
We have acted as special counsel to NS8 Corporation (the "Company"), in
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connection with the registration of ___________shares (the "Shares") of its
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common stock with the Securities and Exchange Commission (the "SEC"). We have
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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"),
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filed by the Company with the SEC on _________ ___, 2005. The Company filed the
Registration Statement on behalf of certain selling stockholders (the "Selling
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Stockholders"). This opinion relates solely to the Selling Shareholders listed
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on Exhibit "A" hereto and number of Shares set forth opposite such Selling
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Stockholders' names. The SEC declared the Registration Statement effective on
__________ ___, 2005.
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.
EX-160
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 ________ 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 Transfer Agent specifically in connection with
the issuance 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,
EX-161
EXHIBIT "A"
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(LIST OF SELLING STOCKHOLDERS)
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Name: No. of Shares:
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EX-162
