IRREVOCABLE TRANSFER AGENT INSTRUCTIONS December 20, 2006
Exhibit
10.10
IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS
December
20, 2006
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Nevada
Agency and Trust Company
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Reno,
Nevada 89501
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RE: COBALIS
CORPORATION
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”)
of
even date herewith by and between Cobalis Corporation, a Nevada corporation
(the “Company”),
and
the Buyers set forth on Schedule I attached thereto (collectively the
“Buyers”).
Pursuant to the Securities Purchase Agreement, the Company shall sell to the
Buyers, and the Buyers shall purchase from the Company a Secured Convertible
Debenture in the amount of $2,500,000 (the “Closing Note”), a Secured
Convertible Debenture in the amount of $675,000 (the “Filing Note”), and a
Secured Convertible Debenture in the amount of $675,000 (the “Final Note”),
(collectively, the “Debentures”)
for a
total aggregate principal amount of Three Million Eight Hundred Fifty Dollars
($3,850,000), 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 6,640,602 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. |
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”).
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| 2. |
Up
to 6,640,602 shares of Common Stock to be issued to the Buyers upon
exercise of the Warrants (the “Warrant
Shares”).
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This
letter shall serve as our irrevocable authorization and direction to The Nevada
Agency and Trust Company (the “Transfer
Agent”)
to do
the following:
1
| 1. |
Conversion
Shares and Warrant Shares.
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| 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 (and a copy to the Company) by the ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Esq. as
escrow agent (the “Escrow
Agent”)
on behalf of the Company together with payment of Transfer Agent’s
transfer fee. 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 then 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. |
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:
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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.”
2
| c. |
In
the event that counsel to the Company fails or refuses to render
an
opinion as required by the terms of the Convertible Debenture or
the
Warrant 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.
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| 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 and shall send to
Transfer
Agent payment of all transfer fees associated with the issuance of
Conversion Shares or the Warrant Shares pursuant to such Conversion
Notice
or Exercise Notice as the case may
be.
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| 2. |
All
Shares.
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| a. |
The
Transfer Agent shall reserve for issuance to the Buyers a minimum
of
10,583,737 shares authorized and unissued shares of Common Stock
for
issuance upon conversion of the Debentures and exercise of the Warrants.
Upon notification of the approval by the stockholders of the Company
of
the increase in the Company’s authorized Common Stock from 50,000,000 to
100,000,000, the Transfer Agent shall reserve for issuance to the
Buyers a
minimum of an additional 4,816263 shares of Common Stock for issuance
upon
conversion of the Debentures and exercise of the Warrants. 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.
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| 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.
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| c. |
The
Transfer Agent shall rely exclusively on the Conversion Notice or
the
Exercise Notice and shall have no liability for relying on such
instructions. Any Conversion 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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3
| 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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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 by or referred to 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.
If
Nevada
Agency resigns as the transfer agent of the Company during the term of this
agreement, the Company shall provide notice of such resignation to the Buyers
thirty (30) business days prior to the effective date of such resignation and
the Company shall within five (5) days of such notice to the Buyers obtain
a
suitable replacement transfer agent that will agree 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, nor shall the terms of this Agreement limit the Company’s
contractual, common law, or statutory duty to indemnify the Transfer Agent
as
the Company’s agent.
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.
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. Any action for injunctive relief
brought against Transfer Agent shall be brought in a court of general
jurisdiction in Washoe County, Nevada and in no other court or
forum.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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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.
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COMPANY:
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Cobalis
Corporation
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| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive
Officer
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| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
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▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
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Nevada
Agency and Trust Company
By:_________________________
Name:_______________________
Title:________________________
5
SCHEDULE
I
SCHEDULE
OF BUYERS
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Name
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Signature
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Address/Facsimile
Number
of Buyers
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Cornell
Capital Partners, LP
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By: Yorkville
Advisors, LLC
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▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
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Its: General
Partner
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Jersey
City, NJ 07303
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Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
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By:
/s/ ▇▇▇▇ ▇▇▇▇▇▇ __
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Name: ▇▇▇▇
▇▇▇▇▇▇
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Its: Portfolio
Manager
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SCHEDULE
I-1
EXHIBIT
I
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
_________,
200_
________
Attention:
RE: COBALIS
CORPORATION
Ladies
and Gentlemen:
We
are
counsel to Cobalis Corporation, (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 up to Three
Million Eight Hundred Fifty Dollars ($3,850,000) of secured convertible
debentures, which shall be convertible into shares (the “Conversion
Shares”)
of the
Company’s common stock, par value $.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 ______________ ___, 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.
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, | |||
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By:
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/s/ | ||
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EXHIBIT
I-1
EXHIBIT
II
FORM
OF OPINION
VIA
FACSIMILE AND REGULAR MAIL
________
Attention:
RE: COBALIS
CORPORATION
Ladies
and Gentlemen:
We
have
acted as special counsel to Cobalis 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 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.
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, | |||
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By:
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/s/ | ||
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EXHIBIT
II
EXHIBIT
A
(LIST
OF SELLING STOCKHOLDERS)
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Name:
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No.
of Shares:
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EXHIBIT A