IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
February 13, 2006
Interstate Transfer Company
6084 So. 000 X.Xxx. 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxxx
RE: LASER ENERGETICS, INC.
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Securities Purchase
Agreement (the "Securities Purchase Agreement") of even date herewith by and
between Laser Energetics, Inc., (f/k/a Happy Food Corporation) an Oklahoma
corporation (the "Company"), and the Buyers set forth on Schedule I attached
thereto (collectively the "Buyers") and that certain Second Amended and Restated
Pledge and Escrow Agreement (the "Pledge Agreement") of even date herewith among
the Company, the Buyers and Xxxxx Xxxxxxxx, as escrow agent (the "Escrow Agent")
and that certain Warrant of even date herewith between the Company and the
Buyers (the "Warrant"). 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 Thousand Dollars ($1,200,000), plus
accrued interest, which are convertible into shares of the Company's Class A
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 up to 200,000,000
shares of the Company's Common Stock 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. The Company has agreed to issue to the Buyers up to 3,000,000 shares
(the "Warrant Shares") of the Company's Common Stock upon exercise
of the Warrant.
3. Xxxxxx Xxxxxx, Xxxxxx Xxxxx and Xx. Xxxx XxXxxxxx (the "Pledgors")
have delivered to the Buyers stock certificates representing
8,349,220 shares (the "Escrowed Shares") of the Company's Common
Stock, in the amounts specified on the signature pages of the Pledge
Agreement, that have been or are being delivered to the Escrow Agent
pursuant to the Pledge Agreement.
This letter shall serve as our irrevocable authorization and direction to
Interstate Transfer Company (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, Warrant Shares and the Interest Shares, the
Transfer Agent shall issue the Conversion Shares, Warrant
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 hereto as Exhibit I, or a properly
completed Exercise Notice in the form attached to the Warrant
as Exhibit A thereto (the "Exercise Notice"), delivered on
behalf of the Company to the Transfer Agent by Xxxxx Xxxxxxxx,
Esq. (the "Escrow Agent"). 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 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 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 its Deposit
Withdrawal At Custodian ("DWAC") system provided the Buyers
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
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, Warrant 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,
Warrant Shares and Interest Shares shall bear the following
legend:
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"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 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.
d. Instructions Applicable to Escrow Agent. Upon the Escrow
Agent's receipt of a properly completed conversion notice
substantially in the form attached as an exhibit to the
Debentures or instructions to exercise the Warrant, the Escrow
Agent shall, within one (1) Trading Day thereafter, send to
the Transfer Agent a Conversion Notice in the form attached
hereto as Exhibit I, or an Exercise Notice, 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. 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,
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. 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.
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3. All Shares.
a. The Transfer Agent shall reserve for issuance to the Buyers
the Conversion Shares, the Escrowed 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 such 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
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 hereby 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
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share less than its closing bid price, as quoted by Bloomberg, LP (the "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 Bid Price of such
Common Stock determined immediately prior to its issuance, (iii) issue any S-8
shares of the Company's Common Stock.
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]
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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.
COMPANY:
LASER ENERGETICS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: President & CEO
ESCROW AGENT
/s/ Xxxxx Xxxxxxxx
---------------------------
Xxxxx Xxxxxxxx, Esq.
Interstate Transfer Company
---------------------------------------
By: /s/ Xxxxx Xxxxxxxxx
--------------------
Name: Xxxxx Xxxxxxxxx
--------------------
Title: President
--------------------
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SCHEDULE I
SCHEDULE OF BUYERS
-----------------------------------------------------------------------------------------------------------------
Address/Facsimile
Name Signature Number of Buyers
-----------------------------------------------------------------------------------------------------------------
Cornell Capital Partners, LP By: Yorkville Advisors, LLC 000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxx: Xxxxxxx Xxxxxxx Xxxxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
By:__________________________
Name: Xxxx Xxxxxx
Its: Portfolio Manager
SCHEDULE I-1
EXHIBIT I
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF CONVERSION NOTICE
Reference is made to the Securities Purchase Agreement (the "Securities
Purchase Agreement") between LASER ENERGETICS, INC., (the "Company"), and the
Buyers set forth on Schedule I attached thereto dated February ____ 2006. In
accordance with and pursuant to the Securities Purchase Agreement, the
undersigned hereby elects to convert convertible debentures into shares of Class
A common stock, par value $0.001 per share (the "Common Stock"), of the Company
for the amount indicated below as of the date specified below.
Conversion Date: ___________________________
Amount to be converted: $___________________________
Conversion Price: $___________________________
Shares of Common Stock Issuable: ___________________________
Amount of Debenture unconverted: $___________________________
Amount of Interest Converted: $___________________________
Conversion Price of Interest: $___________________________
Shares of Common Stock Issuable: ___________________________
Amount of Liquidated Damages: $___________________________
Conversion Price of Liquidated Damages: $___________________________
Shares of Common Stock Issuable: ___________________________
Total Number of shares of Common Stock to be issued: ___________________________
EXHIBIT I-1
Please issue the shares of Common Stock in the following name and to the
following address:
Issue to: ___________________________
Authorized Signature: ___________________________
Name: ___________________________
Title: ___________________________
Phone #: ___________________________
Broker DTC Participant Code: ___________________________
Account Number*: ___________________________
* Note that receiving broker must initiate transaction on DWAC System.
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EXHIBIT II
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
_________, 2006
________
Attention:
RE: LASER ENERGETICS, INC.
Ladies and Gentlemen:
We are counsel to LASER ENERGETICS, INC., (the "Company"), and have
represented the Company in connection with that certain Securities Purchase
Agreement, dated as of February __, 2006 (the "Securities Purchase Agreement"),
entered into by and among the Company and the Buyers set forth on Schedule I
attached thereto (collectively the "Buyers") pursuant to which the Company has
agreed to sell to the Buyers up to One Million Two Hundred Thousand Dollars
($1,200,000) of secured convertible debentures, which shall be convertible into
shares (the "Conversion Shares") of the Company's Class A common stock, par
value $0.001 per share (the "Common Stock"), in accordance with the terms of the
Securities Purchase Agreement. Pursuant to the Securities Purchase Agreement,
the Company also has entered into a Registration Rights Agreement, dated as of
February ___, 2006, with the Buyers (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 _______, 2006, 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 __________, 2006 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 II-1
The Buyers 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:______________________________
EXHIBIT II-2
EXHIBIT III
TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
FORM OF OPINION
________________ 2006
VIA FACSIMILE AND REGULAR MAIL
________
Attention:
RE: LASER ENERGETICS, INC.
Ladies and Gentlemen:
We have acted as special counsel to LASER ENERGETICS, 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 _________ ___, 2006. 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
__________ ___, 2006.
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 III-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 issuance 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 III-2
EXHIBIT "A"
(LIST OF SELLING STOCKHOLDERS)
Name: No. of Shares:
--------------------------------------------------- ---------------------------
EXHIBIT A-1
