EXHIBIT 10.7
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
April 11, 2006
Atlas Stock Transfer Corp.
0000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxx Xxxx
RE: SWISS MEDICA, INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement") of even date herewith by and between Swiss
Medica, Inc., a Delaware corporation (the "Company"), and the Buyers set forth
on Schedule I attached thereto (collectively the "Buyers") and that certain
Pledge and Escrow Agreement (the "Pledge Agreement") of even date herewith among
the Company and 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 Two Million Dollars ($2,000,000), plus accrued interest,
which are convertible into shares of the Company's common stock, par value $.001
per share (the "Common Stock"), at the Buyers discretion. The Company has also
issued to the Buyer warrants to purchase up to 2,000,000 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. a minimum of 60,000,000, or as otherwise indicated in the Investor's
Registration Rights Agreement, 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 2,000,000 shares of Common Stock to be issued to the Buyers
upon exercise of the Warrant (the "Warrant Shares").
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3. The transfer of up to 27,586,207 shares of Common Stock (the
"Reserved Shares") that are being reserved by the Atlas Stock
Transfer Corp. (the "Transfer Agent") as outlined herein and
pursuant to the Pledge Agreement.
This letter shall serve as our irrevocable authorization and direction
to 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 the Xxxxx
Xxxxxxxx, Esq., counsel to the Buyer, 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. On the other
had 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:
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"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
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 Xxxxx Xxxxxxxx. Upon Xxxxx
Xxxxxxxx'x receipt of a properly completed Conversion Notice
or Exercise Notice and the Aggregate Exercise Price (as
defined in the Warrant), Xxxxx Xxxxxxxx shall, within one (1)
Trading Day thereafter, send to the Transfer Agent and the
Company 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. Reserved Shares.
a. Instructions Applicable to Transfer Agent. With respect to the
Reserved Shares, upon an event of default as set forth in the
Pledge Agreement, the Transfer Agent shall issue the Escrowed
Shares to the Buyers all of the Escrowed Shares, provided that
in the event that such issuance of Escrowed Shares to the
Buyers shall would cause the Buyers, together with its
affiliates, to beneficially own in excess of 9.99% of the
outstanding capital of the Company, upon delivery to the
Transfer Agent of a properly completed and duly executed
Default Notice (the "Default Notice") in the form attached as
Exhibit A to the Pledge Agreement, delivered to the Transfer
Agent by the Xxxxx Xxxxxxxx, Esq., counsel to the Buyer. In
the event that such an issuance to the Buyer shall cause the
Buyer to own in excess of 9.99% of the outstanding capital of
the Company the Buyer shall the right to deliver to the
Transfer Agent a Default Notice every time the Buyer's
holdings of Escrowed Shares is under 9.99% of the outstanding
capital of the Company until such time the Buyers has
foreclosed on all Escrowed Shares. Upon receipt of a Default
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 Default
Notice, a certificate, registered in the name of the Buyer or
its designees, for the number of Escrowed Shares to which the
Buyer shall be entitled as set forth in the Default 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.
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b. Instructions Applicable to Xxxxx Xxxxxxxx. Upon Xxxxx
Xxxxxxxx'x receipt of a properly completed Default Notice,
Xxxxx Xxxxxxxx shall, within one (1) Trading Day thereafter,
send to the Transfer Agent and the Company the Default Notice
which shall constitute an irrevocable instruction to the
Transfer Agent to process such Default Notice in accordance
with the terms of these instructions.
c. 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 Reserved Shares (either with or
without restrictive legends, as applicable), then the Company
irrevocably and expressly authorizes counsel to the Buyers to
render such opinion. The Transfer Agent shall accept and be
entitled to rely on such opinion for the purpose of
transferring the Reserved Shares.
3. All Shares.
a. The Transfer Agent shall reserve for issuance to the Buyers a
minimum of 60,000,000, or as otherwise indicated in the
Investor's Registration Rights Agreement, Conversion Shares,
2,000,000 Warrant Shares and 27,297,260 Reserved 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 Xxxxx Xxxxxxxx t 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, the Escrow Notice, or the Exercise Notice and shall
have no liability for relying on such instructions. Any
Conversion Notice, Default 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.
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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.
Certain Notice Regarding Xxxxx Xxxxxxxx. The Company and the Transfer
Agent hereby acknowledge that Xxxxx Xxxxxxxx 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, Xxxxx Xxxxxxxx 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 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:
SWISS MEDICA, INC.
By: /s/ Xxxxxxxxx Xxxxxxx
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Name: Xxxxxxxxx Xxxxxxx
Title: Chief Executive Officer
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx, Esq.
Atlas Stock Transfer Corp.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
----------------------------
Title: President
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SCHEDULE I
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SCHEDULE OF BUYERS
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Address/Facsimile
Name Signature Number of Buyers
-------------------------------- --------------------------- -----------------------------
Xxxxxxxxxx Equity Partners, Ltd. By: Yorkville Advisors, LLC 0000 Xxxxxxxxx 000 Xxxxxx -
Xxxxxxxxx XX
Its: General Partner Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
By: /s/ Xxxxxx X. Press
-----------------------
Name: Xxxxxx X. Press
Its: Portfolio Manager
SCHEDULE I-1
EXHIBIT I
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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
-------------------------
_________, 2006
_________
Attention:
RE: SWISS MEDICA, INC.
Ladies and Gentlemen:
We are counsel to Swiss Medica, Inc., (the "Company"), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of March __, 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 $2,000,000 of secured 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 March ___, 2005, 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:________________________________
EXHIBIT I-2
EXHIBIT II
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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: SWISS MEDICA, INC.
Ladies and Gentlemen:
We have acted as special counsel to Swiss Medica, 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
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(LIST OF SELLING STOCKHOLDERS)
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Name: No. of Shares:
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EXHIBIT A
