IRREVOCABLE TRANSFER AGENT INSTRUCTIONS May 31, 2007
May 31,
2007
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Worldwide
Stock Transfer, LLC
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Teaneck
NJ 07666
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RE: NATURAL
NUTRITION, INC.
Ladies
and Gentlemen:
Reference
is made to the securities purchase agreement of even date herewith and the
securities purchase agreement (collectively, the “Securities
Purchase Agreement”)
dated
September 9, 2005, each by and between Natural Nutrition, Inc., a Nevada
corporation (the “Company”),
and
Cornell Capital Partners, L.P. (the “Buyer”).
Pursuant to the Securities Purchase Agreement, the Company has issued and sold
to the Buyer secured convertible debentures, one of which was originally issued
on September 9, 2005, as amended, in the original principal amount of
$15,635,199, and another which is to be issued on the date hereof in the
original principal amount of $9,292,894 (collectively, the “Debentures”)
which
are convertible into shares of the Company’s common stock, par value $.001 per
share (the “Common
Stock”),
at
the Buyer’s discretion. The Company has also issued to the Buyer warrants on the
date hereof to purchase additional 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 Buyer upon conversion of the
Debentures plus any shares of Common Stock to be issued to the Buyer
upon
conversion of accrued interest into Common Stock (collectively, the
“Conversion
Shares”).
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| 2. |
Shares
of Common Stock to be issued to the Buyer upon exercise of the Warrant
(the “Warrant
Shares”).
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This
letter shall serve as our irrevocable authorization and direction to Worldwide
Stock Transfer, LLC (the “Transfer
Agent”)
to do
the following:
| 1. |
Conversion
Shares and Warrant Shares.
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| a. |
Instructions
Applicable to Transfer Agent.
With respect to the Conversion Shares and Warrant Shares, the Transfer
Agent shall issue the Conversion Shares and Warrant Shares to the Buyer
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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(the
“Escrow
Agent”)
as agent acting 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 Stock 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 or Warrant Shares
are
not registered for sale under the Securities Act of 1933, as amended,
then
the certificates for the Conversion Shares or Warrant 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 to issue the Conversion Shares or 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 or Warrant
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.
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| 2. |
Other
Agreements.
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| a. |
The
Transfer Agent shall reserve for issuance to the Buyer a minimum of
120,000,000 shares for issuance to the Buyer upon conversion of the
Debentures or 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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| 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 Buyer, a partner of the general partner of the Buyer
and
counsel to the Buyer 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 Buyer and neither the
Company nor the Transfer Agent will seek to disqualify such
counsel.
3
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
Buyer.
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 Buyer is relying on the
representations and covenants made by the Company and the Transfer Agent
hereunder and are a material inducement to the Buyer 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.
Transfer
Agent Binding Disclaimer:
In
consideration for Worldwide Stock Transfer, LLC agreeing and attesting to all
terms in the above referenced Irrevocable Transfer Agent Instructions, in
particular any kind of lawsuit and or action that may arise from the buyer
instructing Worldwide Stock Transfer, LLC to issue shares based on the legality
of the agreement whereas the issuer is denying the request in full or partially
for whatever reason, the issuer, buyers and any other third party involved
agree
for ourselves, our successors, legal representatives and assigns, at all times
to defend, indemnify and save Worldwide Stock Transfer, LLC, their successors
and assigns, free and harmless from and against any and all claims, from
actions, suits, whether groundless or otherwise, and from and against any and
all liabilities, taxes, losses, damages, costs, charges, counsel fees, and
other
expenses of every nature and character that arises from this
action.
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 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 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 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.
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COMPANY:
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Natural
Nutrition, Inc.
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By: /s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
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Title: Chief
Executive Officer
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ESCROW
AGENT:
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
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▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
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BUYER:
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Cornell
Capital Partners, L.P.
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By:
Yorkville
Advisors, LLC
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Its: Investment
Manager
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By: /s/
▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇
▇▇▇▇▇▇
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Title: Portfolio
Manager
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TRANSFER
AGENT:
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Worldwide
Stock Transfer, LLC
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By: /s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
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Title: SVP
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5
EXHIBIT
I
FORM
OF NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
_________,
200_
________
Attention:
RE: NATURAL
NUTRITION, INC.
Ladies
and Gentlemen:
We
are
counsel to Natural Nutrition, 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 $.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.
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.
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Very
truly yours,
By:____________________________________
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EXHIBIT
I-2
EXHIBIT
II
FORM
OF OPINION
VIA
FACSIMILE AND REGULAR MAIL
________
Attention:
RE: NATURAL
NUTRITION, INC.
Ladies
and Gentlemen:
We
have
acted as special counsel to Natural Nutrition, 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)
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Name:
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No.
of Shares:
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EXHIBIT
A