IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
December 13, 2005
Holladay Stock Transfer Inc.
2939 North 67th Place
Scottsdale AZ 85251
Attention: Thomas C. Laucks
RE: MEDICAL STAFFING SOLUTIONS, INC.
Ladies and Gentlemen:
Reference is made to that certain Investment Agreement (the "Investment
Agreement") of even date herewith by and between Medical Staffing Solutions,
Inc., a corporation organized and existing under the laws of the State of Nevada
(the "Company") and Cornell Capital Partners, LP (referred to as "Cornell"
and/or a "Buyer"). Pursuant to the Investment Agreement, the Company has sold to
the Buyer, and the Buyer have purchased from the Company Series A Preferred
Shares (the "Series A Preferred Shares") in the aggregate amount of Three
Million Dollars ($3,000,000) which is convertible into shares of the Company's
common stock, no par value (the "Common Stock"), at the Buyer' discretion. The
Company has also issued to the Buyer warrants to purchase up to Fifteen Million
(15,000,000) 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 Series A Preferred Shares ("Conversion Shares").
2. Up to Fifteen Million (15,000,000) shares of Common Stock to be
issued to the Buyer upon exercise of the Warrant (the "Warrant
Shares").
This letter shall serve as our irrevocable authorization and direction to
Holladay Stock Transfer 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 and the Warrant Shares, the Transfer Agent shall issue the
Conversion Shares and the 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"), 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 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 Buyer, credit such aggregate number of shares of Common
Stock to which the Buyer shall be entitled to the Buyer's or its 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, and the Warrant Shares are not registered for
sale under the Securities Act of 1933, as amended, then the certificates for the
Conversion Shares and the 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
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 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.
2. All Shares.
a. The Transfer Agent shall reserve for issuance to the Buyer a minimum of
Five Hundred Fifty-One Million Four Hundred Seventy Thousand Five Hundred
Eighty-Eight (551,470,558) Conversion Shares and Fifteen Million (15,000,000)
Warrant Shares. All such shares shall remain in reserve with the Transfer Agent
until the Buyer 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 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.
c. 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 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.
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 herby confirms and the Transfer Agent acknowledges that while
any portion of the Series A Preferred Shares remains unconverted the Company and
the Transfer Agent shall not, without the prior consent of the Buyer, (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 of the Company's Common Stock.
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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 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 Buyer would not purchase the
Series A Preferred Shares.
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.
[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.
MEDICAL STAFFING SOLUTIONS, INC.
By: /s/ Dr. B.B. Sahay
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Name: Dr. B.B. Sahay
Title: President
DAVID GONZALEZ, ESQ.
/s/ David Gonzalez, Esq.
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David Gonzalez, Esq.
HOLLADAY STOCK TRANSFER INC.
By: /s/ Thomas C. Laucks
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Name: Thomas C. Laucks
Title: Secretary
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SCHEDULE I
SCHEDULE OF BUYER
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Address/Facsimile
Name Signature Number of Buyer
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Cornell Capital Partners, LP By: Yorkville Advisors, LLC 101 Hudson Street - Suite 3700
Its: General Partner Jersey City, NJ 07303
Facsimile: (201) 985-8266
By: /s/ Mark Angelo
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Name: Mark Angelo
Its: Portfolio Manager
SCHEDULE I-1
EXHIBIT I
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
, 2005
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Attention:
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RE: MEDICAL STAFFING SOLUTIONS, INC.
Ladies and Gentlemen:
We are counsel to Medical Staffing Solutions, Inc., (the "Company"), and
have represented the Company in connection with that certain Investment
Agreement, dated as of November __, 2005 (the "Investment Agreement"), entered
into by and among the Company and Cornell Capital Partners LP (the "Buyer")
pursuant to which the Company has agreed to sell to the Buyer up to Three
Million Dollars ($3,000,000) of Series A Preferred Shares, which shall be
convertible into shares (the "Conversion Shares") of the Company's common stock,
par value $0.001 per share (the "Common Stock"), in accordance with the terms of
the Investment Agreement. Pursuant to the Investment Agreement, the Company also
has entered into a Registration Rights Agreement, dated as of December ___,
2005, with the Buyer (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 _______, 2005, 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 __________, 2005 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 Buyer 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:
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EXHIBIT I-2
EXHIBIT II
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
2005
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VIA FACSIMILE AND REGULAR MAIL
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Attention:
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RE: MEDICAL STAFFING SOLUTIONS, INC.
Ladies and Gentlemen:
We have acted as special counsel to Medical Staffing Solutions, 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 _________ ___, 2005. 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
__________ ___, 2005.
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-1
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:
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EXHIBIT A-1