Exhibit 2
STOCK EXCHANGE AGREEMENT
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This Stock Exchange Agreement (the "Agreement"), dated as of April 23,
2004, by and among Hyperdynamics Corporation, a Delaware corporation ("HYPD");
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a individual ("Stockholder1") and ▇▇▇ ▇▇▇▇▇▇, ▇▇., a
Individual ("Stockholder2"); whereas Stockholder1 and Stockholder2,
(collectively referred to herein as the "Sellers") are owners of 100% of the
outstanding voting stock of HYD Resources Corporation, a Texas Corporation
(herein also referred to as "HYD Resources"), and that pursuant to the
effectiveness of this Agreement the Sellers stock is being acquired 100% by HYPD
so that HYD Resources Corporation will become a wholly owned subsidiary of HYPD.
R E C I T A L S
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WHEREAS, the Sellers are the record and beneficial owner of all of the
outstanding capital stock of HYD Resources, the number of presently outstanding
shares of common stock of HYD Resources being 100,000 shares, par value $.0001
per share (the "HYD Resources Stock"); and
WHEREAS, the HYD Resources Stock represents 100% of the voting rights
issued and outstanding as each share of common stock represents one vote
pursuant to the bylaws of HYD Resources, and
WHEREAS, HYPD desires to acquire from the Sellers, and the Sellers desire
to convey to HYPD, all of the issued and outstanding HYD Resources Stock owned
by the Sellers in exchange for:
A total of $300,000 worth of HYPD newly issued, unregistered, rule 144
restricted common stock ("HYPD Stock) to be paid in four equal installments
as follows:
$75,000 worth of HYPD Stock due to be immediately issued as of
the date of the signing of this Agreement, (The HYPD Stock price to be
used to determine the number of shares to issue for this first $75,000
will be 80% of the closing bid price on the date of execution of this
Agreement).
$75,000 worth of HYPD Stock due to be issued on July 14, 2004.
The HYPD Stock price to be used to determine the number of shares to
issue for this $75,000 payment will be 80% of the average closing bid
price reported on the OTC/BB or other stock exchange as the case may
be, for all trading days in the period from April 15, 2004 through
July 14, 2004.)
$75,000 worth of HYPD Stock due to be issued on October 14, 2004.
The HYPD Stock price to be used to determine the number of shares to
issue for this $75,000 payment will be 80% of the average closing bid
price reported on the OTC/BB or other stock exchange as the case may
be, for all trading days in the period from July 15, 2004 through
October 14, 2004.)
Stock Exchange Agreement - Page 1 of 16
$75,000 worth of HYPD Stock due to be issued on January 14, 2005.
The HYPD Stock price to be used to determine the number of shares to
issue for this $75,000 payment will be 80% of the average closing bid
price reported on the OTC/BB or other stock exchange as the case may
be, for all trading days in the period from October 15, 2004 through
January 14, 2005.)
All shares due to be paid will be issued within two weeks of each
respective scheduled issuance date. HYPD shall maintain an option to
accelerate the scheduled issuance of the $300,000 worth of stock and
pay any remaining amount by issuing enough HYPD Stock to pay the total
amount paid up to the total $300,000 on any scheduled issuance date.
Should HYD Resources Corporation reflect a net operating loss (NOL)
determined in accordance with Generally Accepted Accounting Principles
(GAAP) for any subsequent reporting quarters of operations for
quarters ending June, 30, 2004, September 30, 2004, or December 31,
2004, then HYPD will maintain the right to offset such NOL to the
payment of the remaining portion of the $300,000 that has not yet been
paid as of those dates as the case may be. In the case of an offset in
any period and the subsequent recovery in future periods, then the
amount offset recovered in future periods will be paid by the company
by issuance of restricted common stock using the average stock price
since the date of the offset up until the date of the end of the
quarter for the recovery of NOL.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements and the respective representations and warranties herein contained in
this Agreement, and on the terms and subject to the conditions set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
EXCHANGE OF SHARES
Section 1.1 HYD Stock. At the Closing (as defined below), the Sellers
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shall transfer, convey and deliver to HYPD, 100,000 shares of common stock of
HYD Resources Corporation, and shall deliver to HYPD stock certificates
representing the HYD Stock, duly endorsed to HYPD or accompanied by duly
executed stock powers in form and substance satisfactory to HYPD.
Section 1.2 HYPD Stock. Within 15 days of Closing, in exchange for the
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100,000 shares of HYD Stock transferred to HYPD, HYPD shall issue and deliver to
the Sellers the HYPD Stock as scheduled above. As issued 50% of the HYPD Stock
will be issued to Shareholder1 and 50% shall be issued to Shareholder2.
The transaction by which the transfer shall take place is referred to in
this Agreement as the "Exchange".
Stock Exchange Agreement - Page 2 of 16
ARTICLE II
THE CLOSING
The Closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 10:00 A.M. on April 23, 2004(the "Closing Date"),
at the offices of HYPD, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or at
such other time and place as agreed upon among the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLERS
The Sellers, Shareholder1 and Shareholder2 hereby severally represent and
warrant to HYPD as follows:
Section 3.1 Ownership of the HYD Stock. The Stockholder owns,
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beneficially and of record, 50, 000 shares each of common stock of HYD Stock;
except for restrictions imposed by national, federal and state securities laws,
(i) such shares are owned by such Stockholder free and clear of any liens,
claims, equities, charges, options, rights of first refusal, or encumbrances;
(ii) the Stockholder has the unrestricted right and power to transfer, convey
and deliver full ownership of such shares without the consent or agreement of
any other person and without any designation, declaration or filing with any
governmental authority; and, (iii) upon the transfer of such shares to HYPD as
contemplated herein, HYPD will receive good and valid title thereto, free and
clear of any liens, claims, equities, charges, options, rights of first refusal,
encumbrances or other restrictions.
Section 3.2 - [Reserved].
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Section 3.3 - [Reserved].
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Section 3.4 Pending Claims. There is no claim, suit, action or
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proceeding, whether judicial, administrative or otherwise, pending or threatened
that would preclude or restrict the transfer to HYPD of the HYD Stock owned by
the Stockholder1 or Stockholder2 or the performance of this Agreement by the
Sellers.
Section 3.5 No Default. The execution, delivery and performance of
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this Agreement by Stockholder1 or Stockholder2 does not and will not constitute
a violation or default under or conflict with any contract, agreement,
understanding or commitment to which such Stockholder1 or Stockholder2 is a
party or by which such Stockholder1 or Stockholder2 is bound.
Section 3.6 Acquisition of Stock for Investment. Stockholder1 and
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Stockholder2 understand that the issuance of HYPD Stock will not have been
registered under the Securities Act of 1933, as amended (the "Act"), or any
national or state securities acts, and, accordingly, are restricted securities,
and that it represents and warrants to HYPD that its present intention is to
Stock Exchange Agreement - Page 3 of 16
receive and hold the HYPD Stock for investment only and not with a view to the
distribution or resale thereof.
Additionally, the Sellers understand that any sale by the Stockholder1 or
Stockholder2 of any of the HYPD Stock received under this Agreement will, under
current law, require either (a) the registration of the HYPD Stock under the Act
and applicable national or state securities acts; (b) compliance with Rule 144
of the Act; or (c) the availability of an exemption from the registration
requirements of the Act and applicable national or state securities acts. The
Sellers understand that HYPD has not undertaken and does not presently intend to
file a Registration Statement to register the HYPD Stock to be issued to the
Sellers. The Sellers hereby agree to execute, deliver, furnish or otherwise
provide to HYPD an opinion of counsel reasonably acceptable to HYPD prior to any
subsequent transfer of the HYPD Stock, that such transfer will not violate the
registration requirements of the federal or national or state securities acts.
The Sellers further agrees to execute, deliver, furnish or otherwise provide to
HYPD any documents or instruments as may be reasonably necessary or desirable in
order to evidence and record the HYPD Stock acquired hereby.
To assist in implementing the above provisions, the Sellers hereby consent
to the placement of the legend, or a substantially similar legend, set forth
below, on all certificates representing ownership of the HYPD Stock acquired
hereby until the HYPD Stock has been sold, transferred, or otherwise disposed
of, pursuant to the requirements hereof. The legend shall read substantially as
follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE SECURITIES
MUST BE ACQUIRED FOR INVESTMENT, ARE RESTRICTED AS TO TRANSFERABILITY, AND
MAY NOT BE SOLD, , HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION AND QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
In addition, the Sellers consent to HYPD placing a "stop transfer notation"
in its corporate records concerning the transfer of the HYPD Stock acquired by
the Sellers.
Section 3.7 [Reserved].
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Section 3.8 Stockholder Access to Information. Stockholder1 and
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Stockholder2 (a) have been afforded the opportunity to ask questions of and
receive answers from representatives of HYPD concerning the business and
financial condition, properties, operations and prospects of HYPD and have asked
such questions as the desired to ask and all such questions have been answered
to the full satisfaction of the Stockholder1 and Stockholder2; (b) has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the relative merits and risks of the transactions contemplated
hereby; (c) has had an opportunity to engage and is represented by an
Stock Exchange Agreement - Page 4 of 16
attorney of its choice; (d) has had an opportunity to negotiate the terms and
conditions of this Agreement; (e) has been given adequate time to evaluate the
merits and risks of the transactions contemplated hereby; and (f) has been
provided with and given an opportunity to review all current information about
HYPD.
Section 3.9 Disclosure. No representation or warranty of Stockholder1
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or Stockholder2 contained in this Agreement (including the exhibits and
schedules hereto) contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
Section 3.10 Indemnification by Stockholder1 and Stockholder2. The
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Exchange being conducted with HYPD is based, to a material degree, upon the
representations and warranties of the Sellers as set forth and contained herein
and the Sellers hereby agree to indemnify and hold harmless HYPD against all
damages, costs, or expenses (including reasonable attorney's fees) arising as a
result of any breach of representation or warranty or omission made herein by
the Sellers.
If any action is brought against HYPD in respect of which indemnity may be
sought against the Sellers pursuant to the foregoing paragraph, HYPD shall
promptly notify the Sellers in writing of the institution of such action (but
the omission to so notify the Sellers shall not relieve it from any liability
that it may have to HYPD except to the extent the Sellers are materially
prejudiced or otherwise forfeit substantive rights or defenses by reason of such
failure), and the Sellers shall assume the defense of such action, including the
employment of counsel to be chosen by the Sellers to be reasonably satisfactory
to HYPD, and payment of expenses. HYPD shall have the right to employ the
Sellers or their own counsel in any such case, but the fees and expenses of such
counsel shall be at HYPD expense, unless the employment of such counsel shall
have been authorized in writing by the Sellers in connection with the defense of
such action, or the Sellers shall not have employed counsel to take charge of
the defense of such action, or counsel employed by the Sellers shall not be
diligently defending such action, or HYPD shall have reasonably concluded that
there may be defenses available to it which are different from or additional to
those available to the Sellers, or that representation of HYPD by the same
counsel would be inappropriate under applicable standards of professional
conduct due to actual or potential differing interests between them (in which
case the Sellers shall not have the right to direct the defense of such action
on behalf of HYPD), in any of which event such fees and expenses shall be borne
by the Sellers. Anything in this paragraph to the contrary notwithstanding, the
Sellers shall not be liable for any settlement of, or any expenses incurred with
respect to, any such claim or action effected without the Sellers written
consent, which consent shall not be unreasonably withheld. The Sellers shall
not, without the prior written consent of HYPD effect any settlement of any
proceeding in respect of which HYPD is a party and indemnity has been sought
hereunder unless such settlement includes an unconditional release of HYPD from
all liability on claims that are the subject matter of such proceeding.
Stock Exchange Agreement - Page 5 of 16
Section 3.11 Organization and Capitalization. HYD Resources
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Corporation is a corporation duly organized, validly existing and in good
standing under the laws of Texas, with full power and authority and all
necessary governmental and regulatory licenses, permits and authorizations to
carry on the businesses in which it is engaged, to own the properties that it
owns currently and will own at the Closing. HYD Resources Corporation does not
have any subsidiaries or any other investments or ownership interest in any
corporation, partnership, joint venture or other business enterprise, except as
set forth in Schedule 3.11. The authorized capital stock of HYD Resources
Corporation consists of 2,000,000,000 shares of common stock, .0001 par value
per share , of which 100,000 shares are validly issued and outstanding. All of
such issued and outstanding shares of HYD Stock have been duly authorized and
validly issued and are fully paid and non-assessable. None of the shares were
issued in violation of any preemptive rights. Except as set forth in Schedule
3.11, there are no existing warrants, options, rights of first refusal,
conversion rights, calls, commitments or other agreements of any character
pursuant to which HYD Resources is or may become obligated to issue any of its
stock or securities. HYD Resources has no obligation to repurchase, reacquire
or redeem any of its outstanding capital stock.
Section 3.12 Subsidiaries HYD Resources has no subsidiaries.
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Section 3.13 Financial Information. HYD has delivered to HYPD the
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balance sheet of HYD as of April 12, 2004, together with all accounting books,
records and transactions since its inception on April 12, 2004.
Section 3.14 Litigation. There are no actions, suits or proceedings,
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formal or informal, pending or threatened against HYD Resources, nor is HYD
Resources subject to any order, judgment or decree, except in all cases, whether
known or unknown, for matters which, in the aggregate, would not result in a
loss to HYD Resources in excess of $10,000.
Section 3.15 Taxes. HYD Resources has filed all tax returns and
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reports due or required to be filed, and has paid all taxes, interest payments
and penalties, if any, required to be paid with respect thereto. HYD Resources
has made adequate provision for the payment of all taxes accruable for all
periods ending on or before the Closing Date to any taxing authority and is not
delinquent in the payment of any material tax or governmental charge of any
nature.
Section 3.16 Compliance with Laws. HYD Resources is, and at all times
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prior to the date hereof has been in compliance with all statutes, orders,
rules, and regulations applicable to it or to the ownership of its assets or the
operation of its business, except for failures to be in compliance that would
not have a material adverse effect on the business, properties, condition
(financial or otherwise) or prospects of HYD Resources, and HYD Resources has no
basis to expect to receive, and has not received, any order or notice of any
such violation or claim of violation of any such statute, order, rule, ordinance
or regulation.
Section 3.17 Books and Records. The books of account, minute books,
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stock record books and other records of HYD Resources, all of which have been
made available to HYPD, are accurate
Stock Exchange Agreement - Page 6 of 16
and complete in all material respects and have been maintained in accordance
with sound business practices.
Section 3.18 Title to Properties; Encumbrances. HYD Resources has good
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title to all of its properties and assets, real and personal, tangible and
intangible, that are material to the condition (financial or otherwise),
business, operations or prospects of HYD Resources, free and clear of all
mortgages, claims, liens, security interests, charges, leases, encumbrances and
other restrictions of any kind and nature, except (i) as specifically disclosed
in Schedule 3.18, (ii) as disclosed in the financial statements of HYD
Resources, (iii) statutory liens not yet delinquent, and (iv) such liens
consisting of zoning or planning restrictions, imperfections of title,
easements, pledges, charges and encumbrances, if any, as do not materially
detract from the value or materially interfere with the present use of the
property or assets subject thereto or affected thereby.
Section 3.19 Disclosure. No representation or warranty of the Sellers
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contained in this Agreement (including the exhibits and schedules hereto)
contains any untrue statement or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
Section 3.20 Insurance. HYD Resources and its Subsidiaries maintain
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adequate insurance with respect to their respective businesses and are in
compliance with all material requirements and provisions thereof.
Section 3.21 Material Agreements; Action. There are no material
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contracts, agreements, commitments, understandings or proposed transactions,
whether written or oral, to which HYD Resources or any of its Subsidiaries is a
party or by which it is bound that involve or relate to: (i) any of their
respective officers, directors, stockholders or partners or any Affiliate
thereof; (ii) the sale of any of the assets of HYD Resources or any of its
Subsidiaries other than in the ordinary course of business; (iii) covenants of
HYD Resources or any of its Subsidiaries not to compete in any line of business
or with any person in any geographical area or covenants of any other person not
to compete with HYD Resources or any of its Subsidiaries in any line of business
or in any geographical area; (iv) the acquisition by HYD Resources or any of its
Subsidiaries of any operating business or the capital stock of any other Person;
(v) the borrowing of money or (vi) the expenditure of more than $10,000 in the
aggregate or the performance by HYD Resources or any Subsidiary extending for a
period more than one year from the date hereof, other than in the ordinary
course of business. There have been made available to HYPD and its
representatives true and complete copies of all such agreements. All such
agreements are in full force and effect. Neither the Company nor any of its
Subsidiaries is in default under any such agreements nor is any other party to
any such agreements in default thereunder in any respect.
Section 3.22 Employee Benefit Plans. HYD Resources is not a party to
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any employee benefit plan.
Stock Exchange Agreement - Page 7 of 16
Section 3.23 No Pending Transactions. Except for the transactions
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contemplated by this Agreement, neither HYD Resources nor any Subsidiary is a
party to or bound by or the subject of any agreement, undertaking, commitment or
discussions or negotiations with any person that could result in (i) the sale,
merger, consolidation or recapitalization of HYD Resources or any Subsidiary,
(ii) the sale of all or substantially all of the assets of HYD Resources or any
Subsidiary, or (iii) a change of control of more than five percent of the
outstanding capital stock of HYD Resources or any Subsidiary.
Section 3.24 No Undisclosed Liabilities. Neither HYD Resources nor or
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any Subsidiary has any obligation or liability (contingent or otherwise) that
would be required to be reflected in the financial statements of the Company in
accordance with GAAP except as reflected in HYD Resources' Balance Sheet.
ARTICLE IV
LIMITATION OF LIABILITY OF CERTAIN PERSONS
Section 33N of the Texas Securities Act, which applies to the transactions
contemplated by this Agreement, limits the liability of certain persons in
connection with actions or series of actions under Section 33 of the Texas
Securities Act. Specifically, Section 33N limits the liability of an attorney,
an accountant, a consultant, or the firm of the attorney, accountant, or
consultant (collectively, the "Person") to an amount equal to three times the
fee paid by the Company or other seller to the Person for the services related
to the offer of securities, unless a court finds the Person engaged in
intentional wrong doing in providing the services.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HYPD
HYPD hereby represents and warrant to the Stockholder as follows:
Section 5.1 Organization and Capitalization. HYPD is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the properties that it owns currently and will
own at the Closing, and to perform its obligations under this Agreement. HYPD
is qualified as a foreign corporation and is in good standing in each
jurisdiction in which the failure to qualify would have a material adverse
effect on the business, properties or condition (financial or otherwise) of
HYPD. HYPD does not have any subsidiaries or any other investments or ownership
interest in any corporation, partnership, joint venture or other business
enterprise, except as set forth in prior SEC filings. Immediately prior to the
Closing Date the authorized capital stock of HYPD consists of (i) 250,000,000
shares of common stock, $.001 par value of which approximately 39,000,000 shares
are validly issued and outstanding at the date hereon,(ii) 1,948 Shares of
Series A Preferred Stock, and, (iii) an aggregate of ________________ options
and warrants to purchase common stock of HYPD.
Stock Exchange Agreement - Page 8 of 16
All of such issued and outstanding securities shares of HYPD have been and all
of the shares of HYPD Stock to be issued hereby will be, at the Closing, duly
authorized and validly issued and are and will be at the Closing fully paid and
non-assessable. None of the shares that were issued and none of the shares to
be issued hereby will be in violation of any preemptive rights. HYPD has no
obligation to repurchase, reacquire or redeem any of its outstanding capital
stock.
Section 5.2 Subsidiaries. All of the outstanding capital stock of, or
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other ownership interests in, each Subsidiary is owned by HYPD, directly or
indirectly, free and clear of any lien or any other limitation or limitation or
restriction (including restrictions on the right to vote). All outstanding
shares of the capital stock of any Subsidiary have been duly authorized and
validly issued and are fully paid and non-assessable and are free of any
preemptive rights. There are no outstanding securities of any Subsidiary
convertible into or evidencing the right to purchase or subscribe for any shares
of capital stock of any Subsidiary, there are no outstanding or authorized
options, warrants, calls, subscriptions, rights, commitments or any other
agreements of any character obligating any Subsidiary to issue any shares of its
capital stock or any securities convertible into or evidencing the right to
purchase or subscribe for any shares of such stock, and there are no agreements
or understandings with respect to the voting, sale, transfer or registration of
any shares of capital stock of any Subsidiary.
Section 5.3 Authorization. All corporate action on the part of HYPD
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necessary for the authorization, execution, delivery and performance of this
Agreement by HYPD has been taken or will be taken prior to the Closing. HYPD
has the requisite corporate power and authority to execute, deliver and perform
this Agreement. This Agreement has been duly executed and delivered by HYPD,
and constitutes a valid and binding obligation of HYPD, enforceable against HYPD
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
and other laws of general application relating to or affecting creditors' rights
and to general equitable principles.
Section 5.4 Litigation. Except as set forth in our SEC filings, there
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are no claims, actions, suits or proceedings, formal or informal, pending or, to
the best knowledge of HYPD, threatened against HYPD, nor is HYPD subject to any
order, judgment or decree, except in either case for matters which, in the
aggregate, would not result in a loss to HYPD in excess of $10,000.
Section 5.5 Taxes. HYPD has filed all federal, state or local tax
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returns and reports due or required to be filed and has paid all taxes, interest
payments and penalties, if any, required to be paid with respect thereto, and
has made adequate provision for the payment of all taxes accruable for all
periods ending on or before the Closing Date to any taxing authority and is not
delinquent in the payment of any material tax or governmental charge of any
nature.
Section 5.6 Financial Information. HYPD has delivered to the
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Stockholder the audited balance sheet of HYPD as of June 30, 2003, together with
the related statements of income, changes in shareholder's equity and cash flow
for the years then ended, including the related notes, all certified by ▇▇▇▇▇▇ &
▇▇▇▇▇▇ PLLC, certified public accountants (the "Financial Statements"), and all
Forms 10-QSB and 8-K since June 30, 2003. Such Financial Statements and Forms
10-QSB and
Stock Exchange Agreement - Page 9 of 16
8-K, including the related notes, are in accordance with the books and records
of HYPD and fairly present the financial position of HYPD and the results of
operations and changes in financial position of HYPD as of the dates and for the
periods indicated, in each case in conformity with generally accepted accounting
principles applied on a consistent basis. Except as, and to the extent
reflected or reserved against in the Financial Statements, HYPD as of the date
of the financial statements has no material liability or obligation of any
nature, whether absolute, accrued, continued or otherwise, not fully reflected
or reserved against in the Financial Statements.
Section 5.7 Compliance with Laws. Except as set forth in Schedule 5.7,
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HYPD is, and at all times prior to the date hereof has been, to the best of its
knowledge, in compliance with all statutes, orders, rules, ordinances and
regulations applicable to it or to the ownership of its assets or the operation
of its businesses, except for failures to be in compliance that would not have a
material adverse effect on the business, properties, condition (financial or
otherwise) or prospects of HYPD and HYPD has no basis to expect, nor has
received, any order or notice of any such violation or claim of violation of any
such statute, order, rule, ordinance or regulation.
Section 5.8 Title to Properties; Encumbrances. HYPD has good and
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marketable title to all of its properties and assets, real and personal,
tangible and intangible, that are material to the condition (financial or
otherwise), business, operations or prospects of HYPD, free and clear of all
mortgages, claims, liens, security interests, charges, leases, encumbrances and
other restrictions of any kind and nature, except (i) as specifically disclosed
in Schedule 5.8, (ii) as disclosed in the Financial Statements of HYPD, (iii)
statutory liens not yet delinquent, and (iv) such liens consisting of zoning or
planning restrictions, imperfections of title, easements, pledges, charges and
encumbrances, if any, as do not materially detract from the value or materially
interfere with the present use of the property or assets subject thereto or
affected thereby.
Section 5.9 Disclosure. To the best of HYPD knowledge, no
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representation or warranty of HYPD contained in this Agreement (including the
exhibits and schedules hereto) contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
Section 5.10 No Default. The execution, delivery and performance of
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this Agreement by HYPD does not and will not constitute a violation or default
under or conflict with any contract, agreement, understanding or commitment to
which it is a party or by which it is bound or the Certificate of Incorporation
or By-Laws of HYPD or any statute, regulation, law, ordinance, judgment, decree,
writ, injunction, order or ruling of any government entity.
Section 5.11 Pending Claims. There is no claim, suit, action or
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proceeding, whether judicial, administrative or otherwise, pending or, to the
best of HYPD's knowledge, threatened that would preclude or restrict the
transfer to the Stockholder of the HYPD Stock or the performance of this
Agreement by HYPD.
Stock Exchange Agreement - Page 10 of 16
Section 5.12 Insurance. HYPD and its Subsidiaries maintain adequate
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insurance with respect to their respective businesses and are in compliance with
all material requirements and provisions thereof.
Section 5.13 [Reserved].
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Section 5.14 No Pending Transactions. Except as set forth in Schedule
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5.14 and for the transactions contemplated by this Agreement, neither HYPD nor
any Subsidiary is a party to or bound by or the subject of any agreement,
undertaking, commitment or discussions or negotiations with any person that
could result in (i) the sale, merger, consolidation or recapitalization of HYPD
or any Subsidiary, (ii) the sale of all or substantially all of the assets of
HYPD or any Subsidiary, or (iii) a change of control of more than five percent
of the outstanding capital stock of HYPD or any Subsidiary.
Section 5.15 No Undisclosed Liabilities. to the best of its knowledge,
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neither HYPD nor or any Subsidiary has any obligation or liability (contingent
or otherwise) that would be required to be reflected in the financial statements
of the Company in accordance with GAAP except as reflected in HYPD Balance
Sheet.
Section 5.16 Indemnification by HYPD. HYPD recognizes that the
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Exchange being conducted with the Stockholder is based, to a material degree,
upon the representations and warranties of HYPD as set forth and contained
herein and HYPD hereby agrees to indemnify and hold harmless the Stockholder
against all damages, costs, or expenses (including reasonable attorney's fees)
arising as a result of any breach of representation or warranty or omission made
herein by HYPD.
If any action is brought against HYPD, the Stockholder (the "Indemnified
Parties") in respect of which indemnity may be sought against HYPD pursuant to
the foregoing paragraph, the Indemnified Parties shall promptly notify HYPD in
writing of the institution of such action (but the omission to so notify HYPD
shall not relieve it from any liability that it may have to such Indemnified
Parties except to the extent HYPD is materially prejudiced or otherwise forfeits
substantive rights or defenses by reason of such failure), and HYPD shall assume
the defense of such action, including the employment of counsel to be chosen by
HYPD to be reasonably satisfactory to the Indemnified Parties, and payment of
expenses. The Indemnified Parties shall have the right to employ HYPD or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the Indemnified Party's expense, unless the employment of such counsel shall
have been authorized in writing by HYPD in connection with the defense of such
action, or HYPD shall not have employed counsel to take charge of the defense of
such action, or counsel employed by HYPD shall not be diligently defending such
action, or the Indemnified Parties shall have reasonably concluded that there
may be defenses available to it which are different from or additional to those
available to HYPD, or that representation of such Indemnified Party and HYPD by
the same counsel would be inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between them
(in which case HYPD shall not have the right to direct the defense
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of such action on behalf of the Indemnified Parties), in any of which event such
fees and expenses shall been borne by HYPD. Anything in this paragraph to the
contrary notwithstanding, HYPD shall not be liable for any settlement of, or any
expenses incurred with respect to, any such claim or action effected without
HYPD written consent, which consent shall not be unreasonably withheld. HYPD
shall not, without the prior written consent of the Indemnified Parties effect
any settlement of any proceeding in respect of which any Indemnified Parties is
a party and indemnity has been sought hereunder unless such settlement includes
an unconditional release of such Indemnified Parties from all liability on
claims that are the subject matter of such proceeding.
ARTICLE VI
CLOSING; DELIVERY
Section 6.1(a) Closing Documents of the Stockholder. The
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obligations of HYPD to effect the transactions contemplated hereby are subject
to the delivery by the Stockholder at Closing of each of the following
documents:
(i) The Stockholder shall have delivered certificates evidencing
their HYD Resources Corporation Common Stock duly endorsed for
transfer by the Stockholder1 and Stockholder2 to HYPD as contemplated
by this Agreement, in form and substance satisfactory to counsel for
HYPD.
(ii) Faxed signatures are valid and acceptable to execute this
agreement.
Section 6.1(b) Closing Documents of HYPD. The obligations of the
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Stockholder to effect the transactions contemplated hereby are subject to each
of the following conditions:
(i) HYPD shall have delivered HYPD Stock, duly executed for issuance
by HYPD to the Sellers as contemplated by this Agreement.
Section 6.1 (c) Conditions to the Obligations of HYPD and the Sellers.
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The obligations of HYPD and the Sellers to effect the transactions contemplated
hereby are further subject to the following condition:
(i) The Board of Directors of HYPD shall have approved and authorized
the transactions and the issuance of the common stock.
(ii) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced or
threatened, and no investigation by any governmental or regulatory
authority shall have been commenced or threatened, seeking to
restrain, prevent or challenge the transactions contemplated hereby or
seeking judgments against HYPD or the Sellers.
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ARTICLE VII
COVENANTS OF HYD RESOURCES AND THE SELLERS
Conduct of Business. From the date hereof until the earlier of the Closing
--------------------
Date or termination of this Agreement pursuant to Article IX, HYD Resources
shall conduct its business only in the ordinary course consistent with past
practice and shall not sell, lease, pledge, dispose of, grant a license in or
otherwise transfer or encumber any of its assets or properties other than in the
usual and ordinary course of its business or with the prior written consent of
HYPD.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Access to Information
-----------------------
(a) HYD Resources shall, and shall cause its officers, directors,
employees and agents to, afford HYPD complete access at all reasonable times
from the date hereof to the Closing Date, to the officers, employees, agents,
properties, books, records and contracts of HYD Resources, and shall furnish to
HYPD all financial, operating and other data and information as HYPD may
reasonably request.
(b) No investigation pursuant to this Section 8.1 shall affect any
representations or warranties of the parties contained herein.
ARTICLE IX
TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
by HYPD at any time prior to Closing.
ARTICLE X
[RESERVED]
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. All notices and other communications provided
-------
for herein shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or overnight air courier guaranteeing next day
delivery:
Stock Exchange Agreement - Page 13 of 16
(a) If to HYPD:
▇▇. ▇▇▇▇ ▇▇▇▇▇, President
Hyperdynamics Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) If to the Sellers to:
▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
And
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; three days after being
deposited in the mail, postage prepaid, sent certified mail, return receipt
requested, if mailed; and the next day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
Section 11.2 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, which consent will not
be unreasonably withheld. This Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns.
Stock Exchange Agreement - Page 14 of 16
Section 11.3 Counterparts. This Agreement may be executed in any
------------
number of counterparts, which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
Section 11.4 Section Headings. The section headings contained in this
----------------
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 11.5 Entire Agreement. This Agreement, the documents to be
-----------------
executed hereunder and the exhibits and schedules attached hereto constitute the
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties pertaining to the subject
matter hereof, and there are no warranties, representations or other agreements
among the parties in connection with the subject matter hereof except as
specifically set forth herein or in documents delivered pursuant hereto. No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties hereto.
All of the exhibits and schedules referred to in this Agreement are hereby
incorporated into this Agreement by reference and constitute a part of this
Agreement.
Section 11.6 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 11.7 Survival. The respective representations, warranties,
--------
covenants and agreements set forth in this Agreement shall survive the Closing
for a period of one year from the execution hereof.
Section 11.8 Public Announcements. The parties hereto agree that prior
--------------------
to making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law to
make such public announcement or statement, then such announcement or statement
may be made without the approval of the other parties.
Section 11.9 Gender. All personal pronouns used in this Agreement
------
shall include the other genders, whether used in the masculine, feminine or
neuter gender, and the singular shall include the plural, and vice versa,
whenever appropriate.
Section 11.10 Choice of Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of Texas without regard to principles of
conflict of laws.
Stock Exchange Agreement - Page 15 of 16
Section 11.11 Costs and Expenses. The parties shall each pay their own
------------------
respective fees and disbursements incurred in connection with this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed effective as of the day and year first above written.
Hyperdynamics Corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇, President
Stockholder1
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Stockholder2
By: /s/ ▇▇▇ ▇▇▇▇▇▇, ▇▇.
----------------------------
▇▇▇ ▇▇▇▇▇▇, ▇▇.
Stock Exchange Agreement - Page 16 of 16