10.1 Stock Exchange Agreement
STOCK EXCHANGE AGREEMENT
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This Stock Exchange Agreement (the "Agreement"), dated as of May 25, 2001,
by and among Hyperdynamics Corporation, a Delaware corporation ("HYPD"); DJX
Ltd., a Belize corporation (the "Stockholder") being the sole stockholder of all
of the capital stock of SCS Corporation (formerly, XXXXX Corp.), a Delaware
corporation ("SCS"); SCS; and X. Xxxxxxxx ("Xx. Xxxxxxxx"), being a control
person of DJX and SCS.
R E C I T A L S
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WHEREAS, the Stockholder is the record and beneficial owner of all of the
capital stock of SCS, the number of presently outstanding shares of common stock
of SCS being 2,000 shares, par value $.0004 per share (the "SCS Stock");
WHEREAS, HYPD desires to acquire from the Stockholder, and the Stockholder
desires to convey to HYPD, all of the issued and outstanding SCS Stock owned by
the Stockholder in exchange for either:
a) 2,725 shares of Series B Preferred Stock (the "Series B Preferred
Stock" or "HYPD Stock") of HYPD, all on the terms and conditions set
forth below, or
b) 20,185,185 shares of restricted common stock as determined in Article
I below.
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 SCS Stock. At the Closing (as defined below), the
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Stockholder shall transfer, convey and deliver to HYPD, 2,000 shares of common
stock of SCS, and shall deliver to HYPD stock certificates representing the SCS
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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2,000 shares of SCS Stock transferred to HYPD, HYPD shall issue and deliver to
the Stockholder either:
a) 2,725 shares of Series B Preferred Stock as established and designated
by the board of directors of HYPD, or
b) 20,185,185 shares ($2,725,000 divided by $.135 per share) of
restricted common stock. The decision to issue series B preferred or
restricted common stock shall be determined by the availability of
series B preferred to be designated by a board resolution. Should the
resolution not be adopted within fifteen (15) days of the execution of
this document, for any reason, then the common stock will be issued.
The transaction by which the transfer shall take place is referred to
in this Agreement as the "Exchange". A copy of the Certificate of
Designation of the HYPD Series B Preferred Stock is attached hereto as
Exhibit "A", if available within the 15 day time frame established
herein.
ARTICLE II
THE CLOSING
The Closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 10:00 A.M. on May 31, 2001(the "Closing Date"),
at the offices of HYPD, 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 or at
such other time and place as agreed upon among the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SCS, THE STOCKHOLDER AND XX. X. XXXXXXXX
The SCS, the Stockholder and Xx. Xxxxxxxx hereby severally represent and
warrant to HYPD as follows:
Section 3.1 Ownership of the SCS Stock. The Stockholder owns,
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beneficially and of record, 2, 000 shares of common stock of SCS 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 Organization. If the Stockholder is either a corporation,
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limited liability company or partnership, or other business entity, it
represents and warrants that it is duly organized, validly existing and in good
standing under the laws of the state or nation of its incorporation or
formation, 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. If the
Stockholder is a corporation, limited liability company or partnership or other
business entity, it is qualified as a foreign corporation, foreign limited
liability company or foreign partnership or foreign business entity (which ever
the case may be) and is in good standing in each jurisdiction in which the
failure to qualify would have material adverse effect on the business,
properties or condition (financial or otherwise) of the Stockholder.
Section 3.3 Authorization. If the Stockholder is a corporation,
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limited liability company or partnership or other business entity, then all
corporate, limited liability company or partnership action on the part of the
corporate, limited liability company or partnership Shareholder necessary for
the authorization, execution, delivery and performance of this Agreement and the
transactions contemplated hereby has been taken or will be taken prior to the
Closing. All action on the part of the Stockholder necessary for the
authorization, execution, delivery and performance of this Agreement by the
Stockholder has been taken or will be taken prior to the Closing. This
Agreement constitutes a valid and binding obligation of the Stockholder,
enforceable against the Stockholder 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 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 SCS Stock owned by
the Stockholder or the performance of this Agreement by the Stockholder.
Section 3.5 No Default. The execution, delivery and performance of
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this Agreement by the Stockholder does not and will not constitute a violation
or default under or conflict with any contract, agreement, understanding or
commitment to which such Stockholder is a party or by which such Stockholder is
bound.
Section 3.6 Acquisition of Stock for Investment. The Stockholder
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understands 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 receive and
hold the HYPD Stock for investment only and not with a view to the distribution
or resale thereof.
Additionally, the Stockholder understands that any sale by the Stockholder
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
Stockholder understands 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 Stockholder. The Stockholder hereby agrees 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 Stockholder 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 Stockholder hereby
consents 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 Stockholder consents to HYPD placing a "stop transfer
notation" in its corporate records concerning the transfer of the HYPD Stock
acquired by the Stockholder.
Section 3.7 [Reserved].
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Section 3.8 Stockholder Access to Information. The Stockholder (a) has
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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 has asked such questions as it
desires to ask and all such questions have been answered to the full
satisfaction of the Stockholder; (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 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 the
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Stockholder or Xx. Xxxxxxxx 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 Stockholder and Xx Xxxxxxxx. The
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Exchange being conducted with HYPD is based, to a material degree, upon the
representations and warranties of Stockholder and Xx. Xxxxxxxx as set forth and
contained herein and the Stockholder and Xx. Xxxxxxxx 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 Stockholder or Xx. Xxxxxxxx.
If any action is brought against HYPD in respect of which indemnity may be
sought against the Stockholder pursuant to the foregoing paragraph, HYPD shall
promptly notify the Stockholder and Xx. Xxxxxxxx in writing of the institution
of such action (but the omission to so notify the Stockholder and Xx. Xxxxxxxx
shall not relieve it from any liability that it may have to HYPD except to the
extent the Stockholder and Xx. Xxxxxxxx is materially prejudiced or otherwise
forfeit substantive rights or defenses by reason of such failure), and the
Stockholder and Xx. Xxxxxxxx shall assume the defense of such action, including
the employment of counsel to be chosen by the Stockholder and Xx. Xxxxxxxx to be
reasonably satisfactory to HYPD, and payment of expenses. HYPD shall have the
right to employ the Stockholder's and Xx. Xxxxxxxx'x 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 Stockholder and Xx. Xxxxxxxx in connection with the defense of such action,
or the Stockholder and Xx. Xxxxxxxx shall not have employed counsel to take
charge of the defense of such action, or counsel employed by the Stockholder and
Xx. Xxxxxxxx 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 Stockholder and Xx.
Xxxxxxxx, 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 Stockholder and
Xx. Xxxxxxxx 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 Stockholder and Xx. Xxxxxxxx. Anything in this paragraph to the contrary
notwithstanding, the Stockholder and Xx. Xxxxxxxx shall not be liable for any
settlement of, or any expenses incurred with respect to, any such claim or
action effected without the Stockholder's and Xx. Xxxxxxxx'x written consent,
which consent shall not be unreasonably withheld. The Stockholder and Xx.
Xxxxxxxx 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.
Section 3.11 Organization and Capitalization. SCS is a corporation
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duly organized, validly existing and in good standing under the laws 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. SCS 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 SCS. SCS 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 SCS consists of 100,000,000 shares of common stock, .0004 par
value per share , of which 2,000 shares are validly issued and outstanding. All
of such issued and outstanding shares of SCS 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 SCS is or may become obligated to issue any of its stock or
securities. SCS has no obligation to repurchase, reacquire or redeem any of its
outstanding capital stock.
Section 3.12 Subsidiaries SCS has no subsidiaries.
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Section 3.13 Financial Information. SCS has delivered to HYPD the
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balance sheet of SCS as of May 31, 2001, together with all accounting books,
records and transactions since its inception on March 15, 2001. Such Financial
Statements, including the related notes, are in accordance with the books and
records of SCS and fairly present the financial position of SCS and the results
of operations and changes in financial position of SCS 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, SCS, 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. As of the Closing Date, there
will not have been any adverse change in the financial condition or other
operations, business, properties or assets of SCS other than liabilities
incurred in the ordinary course of business in which, in the aggregate, are not
in excess of $10,000 from that reflected in the latest Financial Statements of
SCS furnished to HYPD pursuant hereto.
Section 3.14 Litigation. There are no actions, suits or proceedings,
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formal or informal, pending or threatened against SCS, nor is SCS 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 SCS in excess of
$10,000.
Section 3.15 Taxes. SCS has filed all tax returns and reports due or
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required to be filed, and has paid all taxes, interest payments and penalties,
if any, required to be paid with respect thereto. SCS 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. SCS is, and at all times prior to
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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 SCS, and SCS 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 SCS, all of which have been made
available to HYPD, are accurate and complete in all material respects and have
been maintained in accordance with sound business practices.
Section 3.18 Title to Properties; Encumbrances. SCS has good title to
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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 SCS, 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 SCS, (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
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Stockholder or Xx. Xxxxxxxx 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. SCS 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 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 SCS 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 SCS or any of its Subsidiaries other than in the
ordinary course of business; (iii) covenants of SCS 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 SCS or any of its
Subsidiaries in any line of business or in any geographical area; (iv) the
acquisition by SCS 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 SCS 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. SCS is not a party to any
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employee benefit plan.
Section 3.23 No Pending Transactions. Except for the transactions
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contemplated by this Agreement, neither SCS 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 SCS or any Subsidiary, (ii) the sale of
all or substantially all of the assets of SCS or any Subsidiary, or (iii) a
change of control of more than five percent of the outstanding capital stock of
SCS or any Subsidiary.
Section 3.24 No Undisclosed Liabilities. Neither SCS nor or any
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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 SCS's 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) 50,000,000
shares of common stock, $.001 par value of which 13,966,982 shares are validly
issued and outstanding at the date hereon,(ii) 1,948 Shares of Series A
Preferred Stock, and, (iii) an aggregate of 2,029,515 options and warrants to
purchase common stock of HYPD. 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, 2000, 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 Xxxxxx &
Xxxxxx PLLC, certified public accountants (the "Financial Statements"), and all
Forms 10-QSB and 8-K since June 30, 2000. Such Financial Statements and Forms
10-QSB and 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.
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 Employee Benefit Plans. HYPD is not a party to any
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employee benefit plan.
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 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 SCS
Common Stock duly endorsed for transfer by the Stockholder 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 either (i) certificates evidencing HYPD
Series B Preferred Stock, duly executed for issuance by HYPD to the
Stockholder as contemplated by this Agreement, in form and substance
satisfactory to counsel for the Stockholder or the common stock as
decided upon by Stockholder.
Section 6.1 (c) Conditions to the Obligations of HYPD and the
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Stockholder. The obligations of HYPD and the Stockholder to effect the
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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, or the Certificate
of Designation of the HYPD Series B Preferred Stock contemplated
herein.
(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 Stockholder.
ARTICLE VII
COVENANTS OF SCS, THE STOCKHOLDER AND XX. XXXXXXXX
Conduct of Business. From the date hereof until the earlier of the Closing
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Date or termination of this Agreement pursuant to Article IX, SCS 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
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(a) SCS 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 SCS, 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
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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:
(a) If to HYPD:
Xx. Xxxx Xxxxx, President
Hyperdynamics Corporation
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxxx, Xxxxx & Xxxxxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
(b) If to the Stockholder, DJX or Xx. Xxxxxxxx, to:
0000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxx Xxxxxx, XX X0X0X0
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,
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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.
Section 11.3 Counterparts. This Agreement may be executed in any
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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
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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
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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,
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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
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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
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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
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construed in accordance with, the laws of Texas without regard to principles of
conflict of laws.
Section 11.11 Costs and Expenses. The parties shall each pay their own
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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: _____________________________________
Xxxx Xxxxx, President
DJX Ltd.,
By: _____________________________________
X. Xxxxxxxx, President
SCS Corporation
By: _____________________________________
Xxxx Xxxxx, President
Xx. X. Xxxxxxxx
(Signed) ____________________________________