EXHIBIT 10.5 

 

BLACKSTAR ENTERPRISE GROUP, INC.

 

 

April 26, 2019

 

Corporate Stock Transfer, Inc.

3200 Cherry Creek Drive South, Suite 430

Denver, CO 80209

 

Re: Irrevocable Letter of Instruction

 

Ladies and Gentlemen:

 

BlackStar Enterprise Group, Inc., a Delaware corporation (the “Company”) and
Auctus Fund, LLC (the “Investor”) have entered into a securities purchase
agreement dated as of April 26, 2019 (the “Agreement”), providing for the
issuance of the 12% convertible promissory note in the principal amount of
$110,000.00 (the “Note”), as well as the common stock purchase warrant to
purchase 440,000 shares of common stock (the “Warrant”).

 

A copy of the Note and Warrant is attached hereto. You should familiarize
yourself with your issuance and delivery obligations, as transfer agent,
contained therein. The shares to be issued are to be registered in the names of
the registered holder of the securities submitted for conversion or exercise.

 

You are hereby irrevocably authorized and instructed to reserve a sufficient
number of shares of common stock (“Common Stock”) of the Company (initially,
10,000,000 shares) for issuance upon conversion of the Note, and/or exercise of
the Warrant, in accordance with the terms thereof. The amount of Common Stock so
reserved may be increased, from time to time, by written instructions of the
Company or the Investor so long as there are sufficient authorized and unissued
shares of the Company not otherwise reserved and available to do so. The
Investor shall have the right, without any further confirmation or action from
the Company, to periodically request the number of issued and outstanding shares
of the Company.

 

So long as you have previously received confirmation from the Company (or
Investor’s counsel) that the shares have been registered under the 1933 Act or
otherwise may be sold pursuant to an applicable exemption without any
restriction and the Company or its counsel or Investor's counsel provides an
opinion of counsel to that effect in form, substance and scope customary for
opinions of counsel in comparable transactions (and satisfactory to the transfer
agent), together with other documentation that may reasonably be requested, and
the number of shares to be issued are less than 4.99% of the total issued and
outstanding common stock of the Company, such shares should be issued either (i)
electronically by crediting the account of a Prime Broker with the Depository
Trust Company through its Deposit/Withdrawal Agent Commission system, provided
that the Company has been made FAST/DRS eligible by DTCC (DWAC), or (ii) in
certificated form without any legend which would restrict the transfer of the
shares, and you should remove all stop-transfer instructions relating to such
shares (such shares shall be issued from the reserve, but in the event there are
insufficient reserve shares of Common

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Stock to accommodate a notice of conversion under the Note and/or notice of
exercise under the Warrant (each a “Conversion Notice”) or your firm and the
Company agree that the Conversion Notice should be completed using authorized
but unissued shares of Common Stock that the Company has in its treasury that
are not otherwise reserved). CST is not responsible for the accuracy set forth
in the Conversion Notice. Until such time as you are advised by Investor or
Company counsel as above that the shares have been registered under the 1933 Act
or otherwise may be sold pursuant to an applicable exemption without any
restriction, you are hereby instructed to place the following legend on the
certificates:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO an applicable exemption.

 

The Company hereby requests that your firm act promptly, without unreasonable
delay and without the need for any action or confirmation by the Company with
respect to the issuance of Common Stock pursuant to any Conversion Notices
received from the Investor.

 

The Company shall indemnify you and your officers, directors, principals,
partners, agents and representatives, and hold each of them harmless from and
against any and all loss, liability, damage, claim or expense (including the
reasonable fees and disbursements of its attorneys) incurred by or asserted
against you or any of them arising out of or in connection with the instructions
set forth herein, the performance of your duties hereunder and otherwise in
respect hereof, including the costs and expenses of defending yourself or
themselves against any claim or liability hereunder, including claims that may
be asserted by the Company, except that the Company shall not be liable
hereunder as to matters in respect of which it is determined that you have acted
with gross negligence or in bad faith. You shall have no liability to the
Company in respect to any action taken or any failure to act in respect of this
if such action was taken or omitted to be taken in good faith, and you shall be
entitled to rely in this regard on the advice of counsel.

 

The Board of Directors of the Company has approved the foregoing (irrevocable
instructions) and does hereby extend the Company's irrevocable agreement to
indemnify your firm for all loss, liability or expense in carrying out the
authority and direction herein contained on the terms herein set forth.

 

All processing fees will be expected and payable upon receipt of the request
from the presenter of such request. The Company and Investor understand and
agree that Corporate Stock Transfer's fee schedule is subject to change and the
Investor and the Company agree to pay the full amount of any such conversion
according to the Corporate Stock Transfer fee schedule then in force.

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Corporate Stock Transfer shall not be obligated to process any request until and
unless its fees are paid. Further, the Company and Investor understand and
acknowledge that in the event that the Company is delinquent in payment of fees
due Corporate Stock Transfer in an amount less than $1,500, Corporate Stock
Transfer will honor conversion requests with the additional payment of $200.00
per request. In the event that the Company is suspended with Corporate Stock
Transfer due to non-payment with an account balance owing in excess of $2,500,
Investor or Company will be required to bring the account balance current before
any transactions will be processed.

 

The Company agrees that the Corporate Stock Transfer, Inc. (the “Transfer
Agent”) may resign as the Company's transfer agent. In that event, or in the
event that the company terminates the Transfer Agent, the Transfer Agent
reserves the right to and may complete any issuance or transfer requests then
pending. The Company shall engage a suitable replacement transfer agent that
will agree to serve as transfer agent for the Company and be bound by the terms
and conditions of these Irrevocable Instructions within five (5) business days.
In the event that the Company decides to terminate Corporate Stock Transfer, 30
days’ notice of termination must be given and a fee of $350/irrevocable
instruction letter must be paid prior to termination.

 

The Company hereby authorizes the issuance of such number of shares as will be
necessary to fully convert the Note and exercise the Warrant under its terms and
any such shares shall be considered fully paid and non-assessable at the time of
their issuance. The Company and the Investor agree that the Transfer Agent will
be notified in writing by the Company and the Investor when the Note has been
fully converted and the Warrant has been fully exercised, and if there are any
remaining shares in the reservation that are to be released and returned to the
Company’s Authorized shares.

 

The Investor and Company expressly understand and agree that nothing in this
Irrevocable Transfer Instruction Agreement shall require or be construed in any
way to require Corporate Stock Transfer, in its sole discretion, to do, take or
not do or take any action that would be contrary to any court order, any Federal
or State law, rule, or regulation including but expressly not limited to both
the Securities Act of 1933 and the Securities and Exchange Act of 1934 as
amended, the rules and regulations promulgated thereunder by the Securities and
Exchange Commission, or the transfer agent agreement with the Company.

 

The Transfer Agent is not responsible for determining the accuracy of any
conversion notice and may rely on any instructions presented to it consistent
with this letter.

 

The Investor is intended to be and is a beneficiary hereof, and no amendment or
modification to the instructions set forth herein may be made without the
consent of the Investor.

 

 

 

[signature page follows]

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Very truly yours,

 

BlackStar Enterprise Group, Inc.

 

 

By: /s/ John Harris

_________________________

Name: John Harris

Title: Chief Executive Officer

 

Acknowledged and Agreed:

 

Corporate Stock Transfer, Inc.

 

 

By:/s/ Michelle Wingo

_________________________

Name: Michelle Wingo

Title: Escrow Department Manager

 

 

 

 

 

 

Auctus Fund, LLC

 

 

By: /s/ Lou Posner

_________________________

Name: Lou Posner

Title: Managing Director

 

 

 

 

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