IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
August 12, 2005
Fidelity Transfer
Ms. Heidi Sadowski
1800 South West Temple #301
Salt Lake City, UT 84115
(801) 484-7222 x20
Fax (801) 466-4122 or 801.484.0294
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
