Exhibit 4.5
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
May 24, 2006
Transfer Online, Inc.
000 XX Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, XX 00000
RE: JAG MEDIA HOLDINGS, INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement (the
"Securities Purchase Agreement") of even date herewith by and between JAG Media
Holdings, Inc., a Nevada corporation (the "Company"), and the Buyers set forth
on Schedule I attached thereto (collectively the "Buyers") and that certain
convertible debenture (the "Prior Debenture") issued to Cornell Capital
Partners, LP ("Cornell" or a "Buyer") in exchange for a Promissory Note issued
January 25, 2005 by the Company to Cornell. Pursuant to the Securities Purchase
Agreement, the Company shall sell to the Buyers, an the Buyers shall purchase
from the Company, convertible debentures in the aggregate principal amount of
Two Million Two Hundred Fifty Thousand Dollars ($2,250,000), plus accrued
interest (the "Convertible Debentures"), which are convertible into shares of
the Company's common stock, par value $.00001 per share (the "Common Stock"), at
the Buyers discretion. (The Prior Debenture and the Convertible Debentures are
collectively referred to herein as the "Debentures"). The Company has also
issued to the Buyers warrants to purchase up to 12,000,000 shares of Common
Stock, at the Buyers' discretion (collectively, 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 12,000,000 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 Transfer Online, 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 54,000,000 Conversion Shares and
12,000,000 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, 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.
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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3. SUBSEQUENT SALE OR TRANSFER OF THE CONVERSION SHARES OR
WARRANT SHARES.
a. The Transfer Agent shall promptly transfer Conversion
Shares or Warrant Shares from the Buyer to any purchaser
or transferee promptly upon receipt of written notice
from the Buyer or its counsel. To the extent that the
Conversion Shares or Warrant Shares are not subject to an
effective registration statement but are eligible for
resale by the Buyer under an exemption from the
registration requirements of the Securities Act under
Rule 144 or other available exemption, then the Company,
within 2 business day of notice of the Buyer's proposed
sale or transfer, shall deliver a legal opinion on behalf
of the Buyer to the Transfer Agent to effect such
transfer without a restrictive legend.
b. In the event that counsel to the Company refuses, or
fails, to timely render an opinion as may be required by
the Transfer Agent to affect a transfer of the Conversion
Shares or Warrant Shares as set forth above, then the
Company irrevocably and expressly authorizes counsel to
the Buyer to render such opinion. The Transfer Agent
shall accept and rely on such opinion for the purpose of
transferring the Conversion Shares or Warrant Shares in
accordance with the forgoing.
e. The Company hereby confirms to the Transfer Agent and the
Buyer 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.
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.
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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.
In consideration of the Transfer Agent acting as a party to this
agreement, Company assumes full responsibility and agrees to indemnify and save
harmless the Transfer Agent from and against all liabilities, losses, damages,
costs, charges, counsel fees and other expenses of every kind, nature and
character which the Transfer Agent may incur as a result of acting as the
Company's transfer agent pursuant to this agreement; provided, however, that the
provision of this paragraph shall not apply to such liabilities, losses,
damages, costs, charges, counsel fees or other expenses to the extent they have
resulted primarily from the gross negligence or willful misconduct of the
Transfer Agent.
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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:
JAG MEDIA HOLDINGS, INC.
By: _________________________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman and Chief Executive Officer
_____________________________________________
Xxxxx Xxxxxxxx, Esq.
TRANSFER ONLINE, INC.
By: ____________________________________________
Name: __________________________________________
Title: _________________________________________
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SCHEDULE I
SCHEDULE OF BUYERS
ADDRESS/FACSIMILE
NAME SIGNATURE NUMBER OF BUYERS
---- --------- ----------------
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:______________________
Name: Xxxx Xxxxxx
Its: Portfolio Manager
SCHEDULE I-1
EXHIBIT I
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
_________, 200_
________
Attention:
RE: JAG MEDIA HOLDINGS, INC.
Ladies and Gentlemen:
We are counsel to JAG Media Holdings, Inc., (the "Company"), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of ________________ ____, 200_ (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 secured convertible debentures, which
shall be convertible into shares (the "Conversion Shares") of the Company's
common stock, par value $.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 ______________ ___, 200_, 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 _______, 200_, 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 __________, 200_ 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
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 200_
VIA FACSIMILE AND REGULAR MAIL
________
Attention:
RE: JAG MEDIA HOLDINGS, INC.
Ladies and Gentlemen:
We have acted as special counsel to JAG Media Holdings, 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 _________ ___, 200_. 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 __________ ___, 200_.
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:
--------------------------------------- -------------------------------------
EXHIBIT A
