IRREVOCABLE TRANSFER AGENT INSTRUCTIONS March 13, 2007
IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS
March
13,
2007
|
Integrity
Stock Transfer
|
|
▇▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
|
Building
5 - Suite 527
|
|
Henderson,
NV 89014
|
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”)
of
even date herewith by and between NewGen Technologies, Inc., a Nevada
corporation (the “Company”),
and
the Buyers set forth on Schedule I attached thereto (collectively the
“Buyers”)
and
those certain Pledge and Escrow Agreements (the “Pledge
Agreements”)
dated
January 23, 2006 among the Company, ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, the ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as escrow agent (the
“Escrow
Agent”).
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 One Million Two Hundred Fifty Thousand Dollars
($1,250,000), plus accrued interest, which are convertible into shares of the
Company’s common stock, par value $0.001 per share (the “Common
Stock”),
at
the Buyers discretion. 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.
|
▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, have delivered a stock
certificates representing 214,916, 5,116,433, and 5,000,000 shares,
respectively, (the “Escrowed
Shares”)
of the Company’s Common Stock, in their respective names, that have been
delivered to the Escrow Agent pursuant to the Pledge Agreements.
|
This
letter shall serve as our irrevocable authorization and direction to Integrity
Stock Transfer
(the
“Transfer
Agent”)
to do
the following:
|
1.
|
Conversion
Shares.
|
|
a.
|
Instructions
Applicable to Transfer Agent.
With respect to the Conversion Shares and the Interest Shares, the
Transfer Agent shall issue the Conversion 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, delivered to
the
Transfer Agent by the Escrow Agent on behalf of the Company. Upon
receipt
of a Conversion 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, 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 (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 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 and the Interest
Shares
are not registered for sale under the Securities Act of 1933, as
amended,
then the certificates for the Conversion 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.”
|
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
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
the Escrow Agent shall, within one (1) Trading Day thereafter, send
to the
Transfer Agent the Conversion Notice as the case may be, which shall
constitute an irrevocable instruction to the Transfer Agent to process
such Conversion 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 forth in the Escrow
Notice
to the Buyers. Upon receipt of an Escrow Notice and the share certificate
along with a properly executed stock power, 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 and the share
certificate along with a properly executed stock power. 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.
|
|
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
counsel
to the Buyers 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 a minimum
of
6,250,000 Conversion 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 and shall have no liability for relying on such instructions.
Any
Conversion Notice, ▇▇▇▇▇▇ 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.
|
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.
The
Company herby confirms and the Transfer Agent acknowledges that while any
portion of the Debenture
remains unpaid and unconverted the Company and the
Transfer Agent
shall
not, without the prior consent of the Buyers, (i) issue any Common Stock or
Preferred Stock without consideration or for a consideration per share less
than
closing bid price determined immediately prior to its issuance, (ii) issue
any Preferred Stock, warrant, option, right, contract, call, or other security
or instrument granting the holder thereof the right to acquire Common Stock
without consideration or for a consideration per share less than the closing
bid
price of the Common Stock determined immediately prior to its issuance,
(iii)
issue any S-8
shares in excess of
an
aggregate amount great than twenty percent (20%) of the outstanding shares
of
the Company’s Common Stock on the date hereof.
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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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:
|
||
| |
|
|
| By: | ||
|
Name: ▇.
▇▇▇▇▇ ▇▇▇▇▇▇
|
||
| Title: Vice Chairman and Chief Executive Officer | ||
|
▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
|
||
| By: __________________________________ | |||
| Name: ________________________________ | |||
| Title: _________________________________ |