ESCROW AGREEMENT
Exhibit
10.4
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Execution
Copy**
This
ESCROW AGREEMENT (the “Agreement”) is made
and entered into on February 6, 2008, by and among HYPERDYNAMICS CORPORATION
(the “Company”), YA GLOBAL
INVESTMENTS, L.P., (the “Buyer”), YORKVILLE
ADVISORS, LLC (“Investment Manager”),
and XXXXX XXXXXXXX, ESQ., as escrow agent (the “Escrow
Agent”). The Company, the Buyer, and Yorkville may be referred
to individually as a “Party” or collectively as the “Parties.” All
capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in that certain Securities Purchase Agreement dated February 6,
2008 entered into by and between the Company and the Buyer (the “Securities
Purchase Agreement”).
R
E C I T A L S
WHEREAS, the Company and the
Buyer have entered into a Securities Purchase Agreement, pursuant to which the
Company shall issue and sell to the Buyer, and the Buyer shall purchase certain
Securities;
WHEREAS, at all times while
the Buyer holds any of the Securities, the Investment Manager shall perform
monitoring and managing services for the Buyer in connection with the Buyer’s
purchase and investment in the Securities and the Buyer’s rights and obligations
under the Securities Purchase Agreement and other related documents and
agreements, and during such time, the Investment Manager shall be paid on a
quarterly basis, a fee from the Buyer for services performed;
WHEREAS, pursuant to the
Securities Purchase Agreement, the Parties desire that the Monitoring Fees (as
defined in the Securities Purchase Agreement) be deposited into a segregated
escrow account to be held by the Escrow Agent and disbursed to the Investment
Manager on a quarterly basis as set forth in this Agreement as it performs its
monitoring and managing services for the Buyer;
WHEREAS, Escrow Agent has
agreed to accept, hold, and disburse the Monitoring Fees deposited with it
hereunder in accordance with the terms of this Agreement.
A
G R E E M E N T
NOW THEREFORE, for and in
consideration of the foregoing, the mutual covenants and agreements hereinafter
set forth, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1.
Appointment of
Escrow Agent. The
Company, the Buyer, and the Investment Manager hereby mutually appoint and
designate the Escrow Agent to receive, hold and release, as escrow agent, the
Escrow Funds (as defined below) and Escrow Agent hereby accepts such appointment
and designation, all in accordance with the terms hereof.
2. Escrow
Delivery.
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2.1.
Escrow
Funds. Escrow Agent is hereby authorized and directed to use
its bank account as an escrow account for purposes of this
Agreement. The Company shall deposit into the Escrow Account all of
the Monitoring Fees in accordance with the terms and conditions of Section
4(g)(ii) of the Securities Purchase Agreement (such Monitoring Fee funds
actually deposited into the Escrow Account shall be referred to as the “Escrow
Funds”). Such Escrow Funds shall be wired to the following
account in accordance with the wire instructions below and shall be held by
Escrow Agent and released only in accordance with the terms of this
Agreement.
Bank:
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Wachovia,
N.A. of New Jersey
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Routing
#:
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000000000
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Account
#:
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2000014931121
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Name
on Account:
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Xxxxx
Xxxxxxxx Attorney Trust Account
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Name
on Sub-Account:
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Hyperdynamics
Corporation/Monitoring Fee
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3.
Conditions of
Escrow.
3.1.
The Escrow
Deposit. Escrow
Agent shall hold the Escrow Funds until all funds have been disbursed in
accordance with this Agreement (the “Term”) for the
benefit of the Buyer. The Escrow Funds shall be deposited into the Escrow
Account by the Company and the Buyer as set forth in the Securities Purchase
Agreement. Upon each deposit into the Escrow Account, the Buyer shall
provide to the Escrow Agent a completed Monitoring Fee Schedule in the form
attached hereto as Exhibit A (a “Monitoring Fee
Schedule”) with respect to such deposit into escrow setting forth the
date and amount of such deposit and the schedule of disbursements to be made
from escrow.
3.2.
Release of Escrow
Funds. The
Escrow Agent shall disburse the Escrow Funds in accordance with the following
procedures:
(i) The
Escrow Agent shall disburse the designated portion of the Escrow Funds to the
Investment Manager in the amounts and at the times set forth on the Monitoring
Fee Schedules promptly upon receipt from the Buyer of a signed written
instruction directing the Escrow Agent to make such disbursement. In
disbursing Escrow Funds, the Escrow Agent is authorized to rely upon such
written instruction from the Buyer and may accept any signatory from the Buyer
that Escrow Agent has on file.
(ii) In
the event that the Securities are Fully Retired (as defined in the Securities
Purchase Agreement) prior to the full disbursement of all the Escrow Funds, the
Buyer and the Company shall execute a joint written instruction directing the
Escrow Agent to disburse the remaining Escrow Funds to the Company, or to such
other Person as set forth in such joint written direction, provided however, the
Buyer may instruct, by delivery of a signed written instruction, which the
Buyer, in its sole determination may provide, the Escrow Agent to
disburse all or a portion of the remaining Escrow Funds to the Buyer, which
amount shall be credited to any fees, costs, expenses, or other amounts owed to
the Buyer from the Company pursuant to the Securities, the Securities Purchase
Agreement, or any related documents after the Securities are Fully Retired, so
long as the Buyer first provides the Company with advanced written notice of
such amounts owed to it and provides the Company with five business days to
directly pay such amounts to the Buyer.
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3.3.
Conflict. If
a controversy arises between the Parties concerning the release of the Escrow
Funds hereunder, they shall notify Escrow Agent. In that event (or,
in the absence of such notification, if in the good faith judgment of Escrow
Agent such controversy exists), Escrow Agent shall not be required to resolve
such controversy or take an action but shall be entitled to await resolution of
the controversy by joint written instructions from the Parties or may
immediately return the Escrow Funds to the respective Parties, in which event
Escrow Agent shall have no further liability hereunder. If a suit is
commenced against Escrow Agent, it may answer by way of interpleader and name
the Parties as additional parties to such action, and Escrow Agent may tender
the Escrow Funds into such court for determination of the respective rights,
titles and interests of the Parties. Upon such tender, Escrow Agent
shall be entitled to receive from the Parties its reasonable attorneys’ fees and
expenses incurred in connection with said interpleader action or in any related
action or suit. If and when Escrow Agent shall so interplead such
Parties, or either of them, and deliver the Escrow Funds to the clerk of such
court, all of its duties hereunder shall cease, and it shall have no further
obligation in this regard.
3.4.
Cause of
Action. The Company agrees and acknowledges that in no event
shall it have any cause of action, standing, claim, or any other rights against
the Buyer or the Investment Manager with respect written instructions provided
by the Buyer or disbursements made to the Investment Manager in accordance with
Section 3.2. hereunder.
4.
Escrow
Agent.
4.1.
Liability of Escrow
Agent. The
Parties acknowledge, understand and agree that Escrow Agent has accepted Escrow
Agent’s appointment under this Agreement and shall perform and satisfy Escrow
Agent’s duties, liabilities and obligations under this Agreement only as an
accommodation to the Parties. The Parties, jointly and severally,
hereby indemnify Escrow Agent and each representative of Escrow Agent and hereby
agree to hold Escrow Agent and each such representative free and harmless from
and to defend and protect Escrow Agent and such representative against any claim
made, asserted or threatened against Escrow Agent or such representative
(including any such claim made, asserted or threatened by the Parties), and any
claim incurred by Escrow Agent or such representative, excluding, however, any
claim arising from the gross negligence, willful misconduct, criminal conduct or
intentionally tortuous conduct of Escrow Agent or such
representative.
4.2.
Proceeding. Escrow
Agent, in Escrow Agent’s sole discretion, may commence any judicial proceeding
necessary or appropriate to determining the respective rights of the Parties
under this Agreement or to interpreting or enforcing any term, condition or
other provision of this Agreement. The Parties shall jointly and
severally be liable for any and all costs and expenses (including attorneys
fees, expert witness fees, accounting fees and related costs) incurred by Escrow
Agent in connection with such proceeding.
5.
Termination. This
Agreement shall be terminated upon the occurrence of any one of the following:
(i) the release of all the Escrow Funds in accordance with the terms and
conditions of Section 0 hereof; or (ii) otherwise by
written mutual consent signed by the Parties.
6.
Notice. All
notices, demands, requests, or other communications which may be or are required
to be given, served or sent by any of the Parties or the Escrow Agent to any
other party pursuant to this Agreement shall be in writing and shall
be hand delivered (including delivery by courier), sent by facsimile, sent by a
nationally recognized overnight delivery service, or mailed by first-class,
registered or certified mail, return receipt requested, postage prepaid,
addressed to the parties last known address or such other address as the
addressee may indicate by written notice to the other Parties or the Escrow
Agent. Each notice, demand, request or communication that is given or
made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt or the affidavit of messenger being deemed
conclusive but not exclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
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7.
Benefit
and Assignment. None
of the Parties may assign this Agreement without the prior written consent of
all Parties and the Escrow Agent. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No person or entity
other than the Parties and their respective successors and assigns is or shall
be entitled to bring any action to enforce any provision in this Agreement
against any of the Parties, and the covenants and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the Parties or their respective successors and assigns.
8.
Entire Agreement;
Amendment. This
Agreement, along with the Purchase Agreement and any other agreement executed on
the date hereof between the Parties, contains the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior oral
or written agreements, commitments or understandings with respect to such
matters. This Agreement may not be changed orally, but only by an
instrument in writing signed by the Party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
9.
Headings. The headings of
the sections and subsections contained in this Agreement are inserted for
convenience only and do not form a part or affect the meaning, construction or
scope thereof.
10.
Governing Law;
Venue. This
Agreement shall be governed and constructed under and in accordance with the
laws of the State of New Jersey (but not including the conflicts of laws and
rules thereof). For purposes of any action or proceeding involving
this Agreement each of the parties to this Agreement expressly submits to the
jurisdiction of the federal and state courts located in the State of New Jersey
and consents to the service of any process or paper by registered mail or by
personal service within or without the State of New Jersey in accordance with
applicable law, provided a reasonable time for appearance is
allowed. Each Party hereby acknowledges that Xxxxxx County, New
Jersey is the proper venue for any action brought hereunder.
11. Signature in
Counterparts. This
Agreement may be executed in separate counterparts, none of which need contain
the signature of all parties, each of which shall be deemed to be an original
and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this
Agreement to produce or account for more than the number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
12.
Attorney’s
Fees. Should
any action be commenced between any of the Parties concerning the matters set
forth in this Agreement or the right and duties of any other Party in relation
thereto, the prevailing Party in such action shall be entitled, in addition to
such other relief as may be granted, to a reasonable sum as and for its
attorney’s fees and costs; except that Escrow Agent’s attorney’s fees and costs
incurred in connection with disputes arising hereunder between Company, the
Buyer, and the Investment Manager shall be paid by Company, the Buyer and the
Investment Manager as otherwise provided herein.
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13.
Conflict
Waiver. The Company hereby acknowledge that the Escrow Agent
is general counsel to the Buyer, a partner of the Investment Manager and counsel
to both the Buyer and the Investment Manager in connection with the
transactions contemplated and referred herein. The Company agrees
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 Buyer and the Investment Manager and the Company will not seek to disqualify
such counsel. The Company waives any right to seek the
disqualification of Escrow Agent to act as legal counsel to the Buyer or the
Investment Manager as a result of Escrow Agent’s duties
hereunder. The Buyer and the Investment Manager hereby consents to
Escrow Agent acting as escrow agent pursuant to the terms of this Agreement and
hereby acknowledge that in so acting, Escrow Agent shall be bound to act in
accordance with this Agreement and not in the best interest of the Buyer or the
Investment Manager and may be required to enforce its rights under this
Agreement against the Buyer or the Investment Manager. The Buyer or
the Investment Manager further acknowledges and agrees that all communication
delivered to Escrow Agent in furtherance of this Agreement or Escrow Agent’s
duties hereunder may not be kept confidential by Escrow Agent and may not be
protected by the attorney-client privilege. The Buyer or the
Investment Manager hereby waive the conflict of interest and any potential
conflict of interest that may arise as a result of Escrow Agent’s performance of
its duties or exercise of its rights under this Agreement.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
executed and delivered in its name and on its behalf, all as of the date and
year first above written.
“Company”
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Hyperdynamics
Corporation
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By:
/s/ Xxxx Xxxxx
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Name:
Xxxx Xxxxx
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Title: President
and CEO
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“Buyer”
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YA
Global Investments, L.P.
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By:
Yorkville Advisors, LLC
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Its: Investment
Manager
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By:
/s/ Xxxx Xxxxxx
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Name:
Xxxx Xxxxxx
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Title: Portfolio
Manager
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“Investment
Manager”
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Yorkville
Advisors, LLC
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By
/s/ Xxxx Xxxxxx
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Name:
Xxxx Xxxxxx
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Title: Portfolio
Manager
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“Escrow
Agent”
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By:
/s/ Xxxxx Xxxxxxxx, Esq
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Name:
Xxxxx Xxxxxxxx, Esq.
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EXHIBIT
A
MONITORING
FEE SCHEDULE
RELATING
TO HYPERDYNAMICS CORPORATION
To: Escrow
Agent
Date: February
___, 2008
In
accordance with the Agreement, upon each deposit into the Escrow Account, the
Buyer shall provide to the Escrow Agent a completed Monitoring Fee Schedule with
respect to such deposit into escrow setting forth the date and amount of such
deposit and the Schedule of Disbursements to be made to the Investment Manager
from the Escrow Account. Below please find the Monitoring Fee
Schedule in connection with the Monitoring Fee to be deposited into the Escrow
Account pursuant to a Closing under the Securities Purchase
Agreement:
Part I. Deposits
of Monitoring Fee Into Escrow Account
Deposit
Into Escrow
Account $80,000.00 Date
of DepositFebruary __,
2008
Part II. Schedule
of Disbursements to Investment Manager From Escrow Account
Disbursement
Date
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Disbursement
Amount
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Remaining
Escrow
Funds
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||||||
March
1, 2008
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$ | 20,000 | $ | 60,000 | ||||
April
1, 2008
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$ | 2,727 | $ | 57,273 | ||||
May
1, 2008
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$ | 2,727 | $ | 54,545 | ||||
June
1, 2008
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$ | 2,727 | $ | 51,818 | ||||
July
1, 2008
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$ | 2,727 | $ | 49,091 | ||||
August
1, 2008
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$ | 2,727 | $ | 46,364 | ||||
September
1, 2008
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$ | 2,727 | $ | 43,636 | ||||
October
1, 2008
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$ | 2,727 | $ | 40,909 | ||||
November
1, 2008
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$ | 2,727 | $ | 38,182 | ||||
December
1, 2008
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$ | 2,727 | $ | 35,455 | ||||
January
1, 2009
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$ | 2,727 | $ | 32,727 | ||||
February
1, 2009
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$ | 2,727 | $ | 30,000 | ||||
March
1, 2009
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$ | 2,727 | $ | 27,273 | ||||
April
1, 2009
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$ | 2,727 | $ | 24,545 | ||||
May
1, 2009
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$ | 2,727 | $ | 21,818 | ||||
June
1, 2009
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$ | 2,727 | $ | 19,091 | ||||
July
1, 2009
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$ | 2,727 | $ | 16,364 | ||||
August
1, 2009
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$ | 2,727 | $ | 13,636 | ||||
September
1, 2009
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$ | 2,727 | $ | 10,909 | ||||
October
1, 2009
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$ | 2,727 | $ | 8,182 | ||||
November
1, 2009
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$ | 2,727 | $ | 5,455 | ||||
December
1, 2009
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$ | 2,727 | $ | 2,727 | ||||
January
1, 2010
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$ | 2,727 | $ | 0 |
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