EXHIBIT 4.06
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
December 14, 2005
Interstate Transfer Company
6084 South 900 East, Suite 101
Salt Lake City, UT 84121
Attention: Janice Patterson
RE:
NANOSCIENCE
TECHNOLOGIES, INC.
Ladies and Gentlemen:
Reference is made to that certain
Securities Purchase Agreement (the "SECURITIES
PURCHASE AGREEMENT") of even date herewith
by and between Nanoscience
Technologies, Inc., a Nevada corporation
(the "COMPANY"), and the Buyers set
forth on Schedule I attached thereto
(collectively the "BUYERS") and that
certain Escrow Shares Escrow Agreement (the
"ESCROW AGREEMENT") of even date
herewith among the Company, the Buyers and
Gottbetter & Partners, LLP, as escrow
agent (the "ESCROW AGENT"). Pursuant to the
Securities Purchase Agreement, the
Company shall sell to the Buyers, and the
Buyers shall purchase from the
Company, convertible debentures
(collectively, the "DEBENTURES") in the
aggregate principal amount of One Million,
Six Hundred Eighty Five Thousand and
Three Hundred Fifteen Dollars and Sixty
Four Cents ($1,685,315.64), 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.
The
Company has agreed to issue to the Buyers (i) up to Seven
Million Seventy One Thousand (7,071,000) shares of Common Stock
upon
conversion of the Debentures ("CONVERSION SHARES") including
the
shares of Common Stock to be issued to the Buyers upon conversion
of
accrued interest into Common Stock and (ii) 100,000 shares of
Common
Stock upon exercise of the Warrant (as defined in the
Securities
Purchase Agreement) (the "WARRANT SHARES") if required under
the
Securities Purchase Agreement.
2.
The
Company has issued Seven Million One Hundred Seventy One
Thousand (7,171,000)shares of Common Stock (the "ESCROW SHARES")
in
the Buyer's name that have been or are being delivered to the
Escrow
Agent pursuant to the Securities Purchase Agreement and the
Escrow
Agreement.
This letter shall serve as our irrevocable
authorization and direction to
Interstate Transfer Company (the "TRANSFER
AGENT") to do the
following:
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1.
CONVERSION SHARES.
a.
INSTRUCTIONS APPLICABLE TO TRANSFER AGENT. With respect to the
Conversion Shares and the Warrant Shares, the Transfer Agent
shall issue the Conversion Shares or the Warrant 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 hereto as
EXHIBIT I, delivered
on behalf of the Company to the Transfer
Agent by the Escrow Agent or a properly completed and duly
executed notice of exercise substantially in the form attached
to the Warrant (the "EXERCISE NOTICE"), respectively. Upon
receipt of a Conversion Notice or 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 Exercise Notice, a certificate or certificates, registered
in the name of the Buyers or their designees, for the number
of shares of Common Stock to which the Buyers shall be
entitled as set forth in the Conversion Notice or Exercise
Notice or (ii) provided that 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 Buyers' or their
designees' balance account with DTC through their Deposit
Withdrawal At Custodian ("DWAC") system provided the Buyers
cause their bank or broker to initiate the DWAC transaction.
For purposes hereof "TRADING DAY" shall mean any day on which
the Nasdaq National Market is open for customary trading.
b. The
Company hereby confirms to the Transfer Agent and the
Buyers that certificates representing the Conversion Shares
and 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 II attached hereto and (ii) an opinion of counsel in
the form set forth in EXHIBIT III attached hereto, and that if
the Conversion Shares and the Warrant Shares are not
registered for resale under the Securities Act of 1933, as
amended,
then the provisions of paragraph 1(a)(ii), above,
shall not be applicable until such shares are registered, and
the certificates for the Conversion Shares and Warrant 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
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<PAGE>
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 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 Buyers 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 and Warrant Shares.
d.
INSTRUCTIONS APPLICABLE TO ESCROW AGENT. Upon the Escrow
Agent's receipt of a properly completed Conversion Notice
and/or the Exercise Notice, the Escrow Agent shall, within one
(1) Trading Day thereafter, send to the Transfer Agent a
Conversion Notice and/or the Exercise Notice in the form
attached hereto as EXHIBIT I, which shall constitute an
irrevocable instruction to the Transfer Agent to process such
Conversion Notice in accordance with the terms of these
instructions.
2. ESCROW
SHARES.
a. If the
Escrow Agent sends the Escrow Shares to the Transfer
Agent for removal of the restrictive legend, the Company
hereby confirms that the Transfer Agent shall reissue to the
Escrow Agent the Escrow Shares which 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 II attached hereto and (ii)
an opinion of counsel in the form set forth in EXHIBIT III
attached hereto, or counsel to the Company shall issue a legal
opinion to the Company's Transfer Agent that the legend shall
be removed pursuant to Rule 144, Rule 144(k) or applicable
requirements of the Securities Act.
b. In the
event that counsel to the Company fails or refuses to
render an opinion as required to issue the Escrow 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 Buyers to
render such opinion. The Transfer Agent shall accept and be
entitled to rely on such opinion for the purposes of issuing
the Escrow Shares without a legend.
3. ALL
SHARES.
a. The
Transfer Agent shall reserve for issuance to the Buyers
the Conversion Shares and 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.
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b. The
Transfer Agent shall rely exclusively on the Conversion
Notice and Exercise Notice and shall have no liability for
relying on such instructions. Any Conversion 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.
c. The
Company hereby confirms to the Transfer
