IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
August 12, 2005
Fidelity Transfer
Xx. Xxxxx Xxxxxxxx
0000 Xxxxx Xxxx Xxxxxx #000
Xxxx Xxxx Xxxx, XX 00000
(000) 000-0000 x00
Fax (000) 000-0000 or 000.000.0000
RE: HYPERDYNAMICS CORP.
Ladies and Gentlemen:
Reference is made to that certain Subscription Agreement (the "Subscription
Agreement") of even date herewith by and between Hyperdynamics Corp., a Delaware
corporation (the "Company"), and Dutchess Private Equities Fund, II, LP (the
"Holder"). Pursuant to the Subscription Agreement, the Company shall sell to
the Holder, an the Holder shall purchase from the Company, convertible
debentures (collectively, the "Debentures") in the aggregate principal amount of
One Million Five Hundred Thousand Dollars ($1,500,000), 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 Holder's discretion. The Company
has also issued to the Holder a warrant to purchase up to 500,000 shares of
Common Stock, at the Holder's discretion ("Warrant"). These instructions relate
to the following stock or proposed stock issuances or transfers:
1. The Company has agreed to issue to the Holder up to: that number of shares
included in the registration statement for the Debentures based on the Face
Amount divided by the Fixed Conversion Price, of the Company's Common Stock upon
conversion of the Debentures ("Conversion Shares") plus the shares of Common
Stock to be issued to the Holder upon conversion of accrued interest and
liquidated damages into Common Stock (the "Interest Shares").
2. Up to 500,000 shares of Common Stock to be issued upon the exercise of the
Warrant ("Warrant Shares").
This letter shall serve as our irrevocable authorization and direction to
Fidelity 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 Holder 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 1, delivered
on behalf of the Company to the Transfer Agent. Upon receipt of a Conversion
Notice, the Transfer Agent shall within three (3) Trading Days thereafter to
issue and surrender to a national recognized overnight carrier for overnight
delivery to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder or their designees, for the number of
shares of Common Stock to which the Holder shall be entitled as set forth in the
Conversion Notice For purposes hereof "Trading Day" shall mean any day on which
the US Stock Markets are open for customary trading. The Transfer agent shall
promptly give the Company notice of all new security issuances hereunder.
b. The Company hereby confirms to the Transfer Agent and the Holder 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 2 attached hereto and (ii) an opinion of
counsel in the form set forth in Exhibit 3 attached hereto and (iii) board
resolutions authorizing the issuance of such shares until such time as the
Maturity Date of the Debentures, as set forth in Exhibit 4 or (iv) the Share are
deemed sellable under an exemption from the Securities Act of 1993, as amended
(the "Act") when accompanied with the proper paperwork for that exemption. The
Shares shall be issued free-trading directly from Fidelity Transfer, as no sale
is necessary for the Shares to be issued without legend free trading and all
requirements for delivery of a Prospectus pursuant to the Shares have been met
and satisfied. If the Conversion Shares and the Interest Shares are not
registered for sale under the Act , as amended, then the certificates for the
Conversion Shares and Interest Shares shall bear the following legend
substantially as follows:
"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 Holder 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 Interest
Shares. Any costs incurred by Holder for such opinion letter shall be added to
the Face Amount of the Debenture.
2. Warrant Shares.
a. Instructions Applicable to Transfer Agent. With respect to the Warrant
Shares, the Transfer Agent shall issue the Warrant Shares to the Holder from
time to time upon delivery to the Transfer Agent of a properly completed and
duly executed notice of the Holder's election to exercise the Warrant (the
"Exercise Notice"), in the form attached hereto as Exhibit 5, specifying the
number of Warrant Shares to be issued, delivered on behalf of the Company to the
Transfer Agent. Upon receipt of an Exercise Notice, the Transfer Agent shall
within three (3) Trading Days thereafter to issue and surrender to a nationally
recognized carrier for overnight delivery to the address as specified in the
Exercise Notice, a certificate, registered in the name of the Holder or its
designees, for the number of shares of Common Stock to which the Holder shall be
entitled as set forth in the Exercise Notice . For purposes hereof "Trading Day"
shall mean any day on which the US Markets are open for customary trading. The
Transfer agent shall promptly give the Company notice of all new issuances
hereunder.
The Company hereby confirms to the Transfer Agent and Holder that certificates
representing 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 2 attached hereto and
(ii) an opinion of counsel in the form set forth in Exhibit 3 attached hereto,
and that if the Warrant Shares are not registered for sale under the Securities
Act of 1933, as amended, then the certificates for the Warrant Shares shall bear
the restrictive legend referenced above in Section 1b.
b. In the event that counsel to the Company fails or refuses to render an
opinion as required to issue 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 Holder to render
such opinion. The Transfer Agent shall accept and be entitled to rely on such
opinion for the purposes of issuing the Warrant Shares. Any costs incurred by
Holder for such opinion letter shall be added to the Face Amount of the
Debenture.
3. All Shares.
a. The Transfer Agent shall reserve for issuance to the Holder the Conversion
Shares and the Warrant Shares. All such shares shall remain in reserve with the
Transfer Agent until the Holder 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 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, email or any commercially reasonable method.
c. The Company hereby confirms to the Transfer Agent and the Holder 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.
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 Holder.
The Company does hereby agree to keep up-to-date with all payments due to the
Transfer Agent during this period. In the event, the Company is not current in
all its outstanding payment obligations for services provided by the Transfer
Agent, and the Transfer Agent refuses issuance of Common Shares to the Holder
due to the unpaid balance, the Company does hereby authorize Holder to pay any
amounts due to Transfer Agent directly from the Closing of a Put (as defined in
the Investment Agreement). The Transfer Agent hereby acknowledges that upon
receipt of confirmation of a Put Settlement which includes instructions of
payment toward the delinquent account, the Transfer Agent will issue Shares in
accordance with Section 1(a) and 2(a).
The Transfer Agent shall provide ten days' advance written notice to the Holder
before any attempt by the Transfer Agent to cease to provide any issuance or
transfer agent services as contemplated by this agreement shall become
effective. Upon notice that the Transfer Agent is resigning, the Company shall
have the obligation to retain a new transfer agent that will agree to be bound
by the terms of this agreement.
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 Holder is relying on the
representations and covenants made by the Company and the Transfer Agent
hereunder and are a material inducement to the Holder purchasing convertible
debentures under the Subscription Agreement and Debenture 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 Holder 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
Holder 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 Holder 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. Duly authorized to sign on behalf of:
COMPANY:
HYPERDYNAMICS CORP.
/s/Xxxx Xxxxx
-------------
XXXX XXXXX, CEO
FIDELITY TRANSFER
/s/Xxxxx Xxxxxxxx
-----------------
Xx. Xxxxx Xxxxxxxx
EXHIBIT 1
Date:
Pursuant to terms and conditions outlined in the Form of Debenture, we are now
submitting you a Conversion Notice for Debenture Number ____________.
Please have Dutchess' common shares listed on following page delivered via an
nationally recognized overnight carrier (with a tracking number sent to me) to
within three days of the Conversion Date:
[delivery address}
NOTICE OF CONVERSION
----------------------
(To be Executed by the Registered Owner in order to Convert Debenture)
The undersigned hereby irrevocably elects, as of ________________, to
convert $________________ of its convertible debenture (the "Debenture") into
Common Stock of Virtra Systems, Inc. (the "Company") according to the
conditions set forth in the Debenture issued by the Company.
Date of Conversion________________________________________________
Applicable Conversion Price________________________________________
Number of Debentures Issuable upon this Conversion_______________________
Name(Print)___________Dutchess Private Equities Fund, II, LP _________________
----------------------------------------
Address______________312 Stuart St, 3rd Floor____________________________
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Phone_____000-000-0000_____________ Fax________000-000-0000___________
------------------------- ------------
By: /s/Xxxxxxx Xxxxxxxx
-------------------
Xxxxxxx Xxxxxxxx
EXHIBIT 2 FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT
Date: __________
[TRANSFER AGENT]
Re: Hyperdynamics Corp
--------------------
Ladies and Gentlemen:
We are counsel to Hyperdynamics Corp., a Delaware corporation (the
---------------------
"Company"), and have represented the Company in connection with that certain
Subscription Agreement (the "Subscription Agreement") entered into by and among
the Company and _________________________ (the "Holder") pursuant to which the
Company has agreed to issue to the Holder shares of the Company's common stock,
$.0001 par value per share (the "Common Stock") on the terms and conditions set
forth in the Subscription Agreement. Pursuant to the Subscription Agreement,
the Company also has entered into a Registration Rights Agreement with the
Holder (the "Registration Rights Agreement") pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the shares of Common Stock
issued or issuable under the Subscription Agreement under the Securities Act of
1933, as amended (the "1933 Act"). In connection with the Company's obligations
under the Registration Rights Agreement, on ____________ ___, 2005, the Company
filed a Registration Statement on Form S- ___ (File No. 333-________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities which names the Holder as a
selling shareholder thereunder.
In connection with the foregoing, we advise you 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] [the Registration Statement has become
=========================================
effective] under the 1933 Act at [enter the time of effectiveness] on [enter the
======= ------------------------------- ---------
date of effectiveness] and to the best of our knowledge, after telephonic
-----------------------
inquiry of a member of the SEC's staff, no stop order suspending its
------
effectiveness has been issued and no proceedings for that purpose are pending
------
before, or threatened by, the SEC and the Registrable Securities are available
--
for resale under the 1933 Act pursuant to the Registration Statement.
Very truly yours,
[Company Counsel]
By:____________________
cc: [Holder]
EXHIBIT 3
TO TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 2005
VIA FACSIMILE AND REGULAR MAIL
[Transfer Agent]
Attention: Xxxxxx Xxxxxxx
RE: HYPERDYNAMICS CORP
Ladies and Gentlemen:
We have acted as special counsel to Hyperdynamics Corp.. (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 with file number
333-____________. The Company filed the Registration Statement on behalf of
certain selling stockholder (the "Selling Stockholder"). This opinion relates
solely to the Selling Shareholder listed on Exhibit "A" hereto and number of
Shares set forth opposite such Selling Stockholder' names. The SEC declared the
Registration Statement effective on __________ ___, 2005.
We understand that the Selling Stockholder 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 Shareholder is
contained under the heading "Selling Stockholder" 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 Stockholder. The opinions
set forth herein relate solely to the sale or transfer by the Selling
Stockholder 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. 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 Fidelity Transfer may remove the restrictive
legends contained on the Shares.
This opinion relates solely to the number of Shares set forth opposite the
Selling Stockholder listed on Exhibit "A" hereto.
This opinion is furnished to Xxxxxxxx Xxxxxxx, specifically in connection with
the issuance of the Shares, and solely for your information and benefit. The
Shares shall be issued free-trading directly from Fidelity Transfer, as no sale
is necessary for the Shares to be issued without legend free trading and all
requirement for delivery of a Prospectus pursuant to the Shares have been met
and satisfied. This letter may not be relied upon by Fidelity Transfer 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 4 RESOLUTIONS OF THE BOARD OF DIRECTORS OF HYPERDYANMICS CORP.
EFFECTIVE AUGUST 12, 2005
The undersigned Directors of Hyperdynamics Corp., Inc. (the "Company") takes the
following actions by consent with a meeting.
IT HAS BEEN RESOLVED:
The officers of the Company are instructed to take all actions necessary to
execute, deliver, and perform the steps required of the Company in connection
with registration of shares pursuant to the Debenture Agreement, Warrant
Agreement and Subscription Agreement of even date. All shares have been fully
paid and should be issued without restrictive legend, or if the shares have been
not registered for sale under the Securities Act of 1933, as amended, then the
certificates shall be marked with proper legend.
FURTHER, IT HAS BEEN RESOLVED:
That each member of the Board jointly and individual hereby agree not to issue a
stop transfer order on any of the shares defined herein, if the to Dutchess
Private Equities Fund, II, LP. ("Dutchess")
FURTHER, IT HAS BEEN FURTHER RESOLVED:
The officers do hereby consent to the appointment of Xxxxxxx Xxxxxxxx of
Dutchess Capital Management, LLC to issue shares pursuant to the shares due to
the Holder as outlined in the Irrevocable Transfer Agent Agreement solely for
the benefit of Dutchess.
FURTHER, IT HAS BEEN RESOLVED:
That the board has given the requisite authority for the Company to enter into
the Subscription Agreement, Warrant Agreement, Security Agreement, Debenture
Agreement, Debenture Registration Rights Agreement, Stock Transfer Agent
Agreement, Investment Agreement and Equity Line Registration Rights Agreement
(collectively, the "Transaction Documents") with Dutchess Private Equities Fund,
II, LP ("Dutchess") dated August 12, 2005
FURTHER, IT HAS BEEN RESOLVED:
That in the event counsel for the Company is unable to write an opinion
regarding the issuance of Shares for any of the Transactions Documents, where
required, that the Transfer Agent shall accept the opinion of the Holder's
counsel.
FURTHER, IT HAS BEEN RESOLVED:
That the board shall issue up to 500,000 shares of Common Stock pursuant to the
Warrant Agreement between the Company and Dutchess; and, up to the amount of
shares registered for resale in the SB-2 filed for Dutchess' underlying
Debentures.
This resolution is signed by the Board, to be effective as of August 12, 2005
Date: August 12, 2005
/s/Xxxx Xxxxx
---------------------------------
By: Xxxx Xxxxx, CEO & Chairman
/s/Xxxxxx X. Xxxxx
----------------------------------
By: Xxxxxx X. Xxxxx Director
/s/Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx Director
/s/Xxxxxx X. Xxxxxx
---------------------
Xxxxxx X. Xxxxxx Director
EXHIBIT 5
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To: Hyperdynamics Corp
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of Common Stock ("Common Stock"), $.001 par value per share, of
Hyperdynamics Corpand, if such Holder is not utilizing the cashless exercise
provisions set forth in this Warrant, encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the aggregate
Exercise Price (as defined in the Warrant) for the number of shares of Common
Stock to which this Form of Election to Purchase relates, together with any
applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise shall
not be all of the shares of Common Stock which the undersigned is entitled to
purchase in accordance with the enclosed Warrant, the undersigned requests that
a New Warrant (as defined in the Warrant) evidencing the right to purchase the
shares of Common Stock not issuable pursuant to the exercise evidenced hereby be
issued in the name of and delivered to:
(Please print name and address)
Dated: _____________, _____ Name of Holder:
(Print)
(By:)
(Name:)
(Title:)
