THIS AMENDMENT IS DATED JANUARY 9, 2006 TO THE ORIGINAL AGREEMENT DATED AUGUST 12, 2005, BELOW.
Exhibit
10.3
THIS
AMENDMENT IS DATED JANUARY 9, 2006 TO THE ORIGINAL AGREEMENT DATED AUGUST 12,
2005, BELOW.
DEBENTURE
REGISTRATION
RIGHTS AGREEMENT
DENBENTURE
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of August 12, 2005,
by and between Hyperdynamics
Corp..,
a
company
organized under the laws of state of Delaware, (the “Company”), and the
undersigned Holder (the “Holder”).
WHEREAS,
upon the terms and subject to the conditions of the Subscription Agreement
between the Holder and the Company (the “Subscription Agreement”), the Company
has agreed to issue and sell to the Holder convertible debentures of the Company
(the “Debentures”), which will be convertible into shares of the Company's
common stock, $.001 par value per share (the “Common Stock”), of the Company.
WHEREAS,
to induce the Holder to execute and deliver the Subscription Agreement, Warrant
Agreement, Security Agreement, Irrevocable Transfer Agent Agreement and the
Debenture Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and applicable state securities laws, with respect to the shares of
Common Stock issuable pursuant to the Subscription Agreement, Warrant Agreement
and Debenture Agreement.
NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants
contained hereinafter and other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, the Company and the Holder hereby
agree as follows:
1.
DEFINITIONS.
As
used
in this Agreement, the following terms shall have the following
meanings:
a.
“Closing Date” shall mean the date in the preamble of this
Agreement.
b.
“Debenture” or "Debentures" mean the convertible debenture issued by the Company
to the Holder.
c.
“Holder” shall mean Dutchess Private Equities Fund, II, LP
d.
"Effective Date" shall mean the date the SEC has declared the Registration
Statement effective and the Company has filed all necessary amendments,
including the letter to request accelerated effectiveness and the following
Prospectus covering the resale of Shares.
e.
"Face
Amount" means one million five hundred thousand dollars ($1,500,000) to be
invested by The Holder.
f.
"Filing Date" shall mean the date the Registration Statement has been filed
with
the SEC and no stop order of acceptance has been issued by the SEC.
g.
“Person” means a corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
h.
"Potential Material Event" means any of the following: (i) the possession by
the
Company of material information not ripe for disclosure in a Registration
Statement, which shall be evidenced by determinations in good faith by the
Board
of Directors of the Company that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs of
the
Company, or (ii) any material engagement or activity by the Company which would,
in the good faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in a Registration Statement at such time,
which
determination shall be accompanied by a good faith determination by the Board
of
Directors of the Company that the Registration Statement would be materially
misleading absent the inclusion of such information.
i.
“Principal Market” means either The American Stock Exchange, Inc., The New York
Stock Exchange, Inc., the Nasdaq National Market, The Nasdaq SmallCap Market,
the National Association of Securities Dealer’s, Inc. OTC electronic bulletin
board, whichever is the principal market on which the Common Stock is listed.
j.
“Register,” “Registered,” and “Registration” refer to a registration effected by
preparing and filing with
the
United States Securities and Exchange Commission (the "SEC") one
or
more Registration Statements in compliance with the 1933 Act and pursuant to
Rule 415 under the 1933 Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and effectiveness
of such Registration Statement(s).
k.
“Registrable Securities” means the shares of Common Stock issued or issuable (i)
pursuant to the Subscription Agreement, (ii) any shares of capital stock issued
or issuable with respect to the such shares of Common Stock and Warrants, if
any, as a result of any stock split, stock dividend, recapitalization, exchange
or similar event or otherwise, which have not been (x) included in a
Registration Statement that has been declared effective by the SEC, or (y)
sold
under circumstances meeting all of the applicable conditions of Rule 144 (or
any
similar provision then in force) under the 1933 Act.
l.
“Registration Statement” means a registration statement of the Company filed
under the 1933 Act.
All
capitalized terms used in this Agreement and not otherwise defined herein shall
have the same meaning ascribed to them as in the Subscription Agreement or
Debenture Agreement.
2. REGISTRATION.
a. Mandatory
Registration. Within fifteen (15) days of the Company filing its Form 10K for
2005, but in no event later than October 15, 2005 (the "Filing Deadline"),
the
Company shall prepare and file with the SEC a Registration Statement or
Registration Statements (as is necessary) on Form SB-2 (or, if such form is
unavailable for such a registration, on such other form as is available for
such
a registration), covering the resale of all of the Registrable Securities,
which
Registration Statement(s) shall state that, in accordance with Rule 416
promulgated under the 1933 Act, such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon stock splits, stock dividends or similar transactions. The Company shall
initially register for resale an amount of shares of Common Stock which would
be
issuable on the date preceding the filing of the Registration Statement based
on
the Fixed Conversion Price (as defined in the Debenture Agreement) of the
Company’s Common Stock on such date and the amount reasonably calculated that
represents the number of shares issuable pursuant to the terms of the Offering,
including those Shares underlying the Warrant Agreement. The total amount of
Shares shall be both 1) the amount specified in the Warrant Agreement and 2)
the
Face Amount of the Debenture divided by the Fixed Conversion Price. For example,
if the Fixed Conversion Price is one dollar (1.00) per share, the amount of
Shares to be registered will be one million five hundred thousand (1,500,000)
shares. (1,500,000/1.00). In the event the Company cannot register sufficient
shares of Common Stock, due to the remaining number of authorized shares of
Common Stock being insufficient, the Company will use its best efforts to
register the maximum number of shares it can based on the remaining balance
of
authorized shares and will use its best efforts to increase the number of its
authorized shares as soon as reasonably practicable.
b. The
Company shall use its best efforts to have the Registration Statement filed
with
the SEC by the Filing Deadline. If the Registration Statement covering the
Registrable Securities required to be filed by the Company pursuant to Section
2(a) hereof is not filed by the Filing Deadline,, then the Company shall pay
the
Holder the sum of two percent (2%) of the Face Amount of the Debentures,
outstanding as liquidated damages, and not as a penalty, for each thirty (30)
calendar day period, pro rata, compounded daily, following the Filing Deadline
until the Registration Statement is filed. In addition, for each thirty (30)
calendar period the Registration Statement goes without filing, the Conversion
Price of the Debentures will decrease by ten percent (10%). For example, in
the
event that upon the one (1) day after the Filing Deadline, the Registration
Statement has not been filed with the SEC, the Conversion Price shall decrease
by ten cents (.10) per share. (1.00*10%=.10).
Notwithstanding
the foregoing, the amounts payable by the Company pursuant to this Section
shall
not be payable to the extent any delay in the filing of the Registration
Statement occurs because of an act of, or a failure to act or to act timely
by
the Holder. The damages set forth in this Section shall continue until the
obligation is fulfilled and shall be paid within three (3) business days after
each thirty (30) day period, or portion thereof, until the Registration
Statement is filed. Failure of the Company to make payment within said three
(3)
business days shall be considered a default.
The
Company acknowledges that its failure to have the Registration Statement filed
by the Filing Deadline will cause the Holder to suffer damages in an amount
that
will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include in this Agreement a provision for liquidated damages.
The
parties acknowledge and agree that the liquidated damages provision set forth
in
this section represents the parties’ good faith effort to quantify such damages
and, as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. The payment of liquidated damages
shall not relieve the Company from its obligations to register the Common Stock
and deliver the Common Stock pursuant to the terms of this Agreement, the
Subscription Agreement and the Debenture.
c. The
Company shall use its best efforts to have the Registration Statement declared
effective by the SEC within ninety (90) calendar days after the Filing Date.
If
the Registration Statement covering the Registrable Securities required to
be
filed by the Company pursuant to Section 2(a) hereof has
not
become
effective within ninety (90) calendar days following the Filing Date, then
the
Company shall pay the Holder the sum of two percent (2%) of the Face Amount
as
liquidated damages and not as a penalty for each thirty (30) calendar day
period, pro rata, compounded daily, following the one ninety (90) calendar
day
period until the Registration Statement is declared effective.
If
the
Registration Statement covering the Registrable Securities required to be filed
by the Company pursuant to Section 2(a) hereof has
become
effective, but after the effective date the Holder’s right to sell is suspended,
then the Company shall pay the Holder the sum of two percent (2%) of the Face
Amount plus interest and penalties due to the Holder for the Registrable
Securities pursuant to the Subscription Agreement for each thirty (30) calendar
day period, pro rata, compounded daily, following the suspension until such
suspension ceases.
Notwithstanding
the foregoing, the amounts payable by the Company pursuant to this Section
shall
not be payable to the extent any delay in the effectiveness of the Registration
Statement occurs because of an act of, or a failure to act or to act timely
by
the Holder. The damages set forth in this Section shall continue until the
obligation is fulfilled and shall be paid within three (3) business days after
each thirty (30) day period, or portion thereof, until the Registration
Statement is declared effective or such suspension is released. Failure of
the
Company to make payment within said three (3) business days shall be considered
a default.
The
Company acknowledges that its failure to have the Registration Statement
become
effective within said ninety (90) calendar day period or to permit the
suspension of the effectiveness of the Registration Statement, will cause the
Holder to suffer damages in an amount that will be difficult to ascertain.
Accordingly, the parties agree that it is appropriate to include in this
Agreement a provision for liquidated damages. The parties acknowledge and agree
that the liquidated damages provision set forth in this section represents
the
parties’ good faith effort to quantify such damages and, as such, agree that the
form and amount of such liquidated damages are reasonable and will not
constitute a penalty. The payment of liquidated damages shall not relieve the
Company from its obligations to register the Common Stock and deliver the Common
Stock pursuant to the terms of this Agreement, the Subscription Agreement and
the Debenture.
d.
The
Company agrees not to include any other securities, in this Registration
Statement without Holder prior written consent, unless for the
Holder. Furthermore,
the Company agrees that it will not file any other Registration Statement,
including those on Form S-8, for other securities (other than those for existing
option holders, strategic partners or in connection with a merger or
acquisition), until three hundred and sixty (360) calendar days after the
Effective Date unless it has written approval from the Holder. Failure to obtain
written approval from the Holder will cause the Holder to suffer damages that
will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include a provision for liquidated damages and the Company agrees
to pay, the Holder the sum of two percent (2%) of the Face Amount as liquidated
damages and not as a penalty for each thirty (30) calendar day period, pro
rata,
compounded daily, until the unauthorized Registration Statement is
withdrawn.
3. RELATED
OBLIGATIONS.
At
such
time as the Company is obligated to prepare and file a Registration Statement
with the SEC pursuant to Section 2(a), the Company will use its best efforts
to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, with respect thereto, the Company
shall have the following obligations:
a.
The
Company shall use its best efforts to cause such Registration Statement relating
to the Registrable Securities to become effective within ninety (90) calendar
days after the date and shall keep such Registration Statement effective
pursuant to Rule 415 until the date on which (A) the Holder shall have sold
all
the Registrable Securities and (B) the Holder has no right to convert the
Shares
it owns into Common Stock under the Subscription Agreement, Debenture Agreement
or Warrant Agreement, respectively (the "Registration Period"), which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of
a
material fact or omit to state a material fact required to be stated therein,
or
necessary to make the statements therein, in light of the circumstances in
which
they were made, not misleading. The Company shall respond to any and all
SEC
comments or correspondence, whether written or oral, direct or indirect,
formal
or informal ("Comments"), within seven (7) business days of receipt by the
Company of such Comments. If the Company fails to respond within seven (7)
business days of receipt of SEC Comments, the Company shall pay to the Holder
an
amount equal to two percent (2%) per month, on a pro rata basis, compounded
daily, of the Face Amount as liquidated damages and not as a penalty;
provided
that the
seven (7) business day period provided herein shall be extended as may be
required by delays caused by Holder's counsel pursuant to paragraph 3g below,
and, provided
further, that
such
seven (7) business day period shall be extended two (2) business days for
responses to SEC staff accounting comments. The Company shall cause the
Registration Statement relating to the Registrable Securities to become
effective no later than two (2) business days after notice from the SEC that
the
Registration Statement has been cleared of all comments. Failure to do so
will
result in the Face Amount on the Debentures to be increased by five percent
(5%)
per calendar day the Company does not request acceleration from the SEC,
as
liquidated damages.
b. The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and
the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
be
necessary to keep such Registration Statement effective during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act
with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the Holder thereof as set forth in such Registration
Statement. In the event the number of shares of Common Stock available under
a
Registration Statement filed pursuant to this Agreement is at any time
insufficient to cover all of the Registrable Securities, the Company shall
amend
such Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in any event
within thirty (30) calendar days after the necessity therefor arises (based
on
the then Purchase Price of the Common Stock and other relevant factors on which
the Company reasonably elects to rely), assuming the Company has sufficient
authorized shares at that time, and if it does not, within thirty (30) calendar
days after such shares are authorized. The Company shall use it best efforts
to
cause such amendment and/or new Registration Statement to become effective
as
soon as practicable following the filing thereof.
Prior
to
conversion of all the Shares, if at any
time
the
conversion of all the Shares outstanding would result in an insufficient number
of authorized shares of Common Stock being available to cover all the
conversions, or in the event, that Holder deems that the Shares authorized
will
become insufficient, then in such event, the Company will move to call and
hold
a shareholder’s meeting within thirty (30) calendar days of such event for the
sole purpose of authorizing additional shares of Common Stock to facilitate
the
conversions. In such an event the Company shall recommend to all shareholders
and management of the Company to vote their shares in favor of increasing the
authorized number of shares of Common Stock. The Company represents and warrants
that under no circumstances will it deny or prevent Holder’s right to convert
the Shares as permitted under the terms of this Subscription Agreement or this
Registration Rights Agreement. The Holder retains the right to request
additional shares upon the determination the company may not be able to
facilitate conversions in the future.
c The
Company shall furnish to the Holder whose Registrable Securities are included
in
any Registration Statement and its legal counsel without charge (i) promptly
after the same is prepared and filed with the SEC at least one copy of such
Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits, the prospectus included in such Registration Statement (including
each preliminary prospectus) and, with regards to such Registration
Statement(s), any correspondence by or on behalf of the Company to the SEC
or
the staff of the SEC and any correspondence from the SEC or the staff of the
SEC
to the Company or its representatives, (ii) upon the effectiveness of any
Registration Statement, a copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number
of
copies as the Holder may reasonably request) and (iii) such other documents,
including copies of any preliminary or final prospectus, as the Holder may
reasonably request from time to time in order to facilitate the disposition
of
the Registrable Securities. The Company filing the documents described in this
paragraph through XXXXX shall constitute delivery.
d. The
Company shall use reasonable efforts to (i) register and qualify the Registrable
Securities covered by a Registration Statement under the applicable securities
or "blue sky" laws of such states of the United States as specified by the
Holder, (ii) prepare and file in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary
to
maintain such registrations and qualifications in effect at all times during
the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify Holder who holds Registrable Securities of
the
receipt by the Company of any notification with respect to the suspension of
the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.
e.
As
promptly as practicable after becoming aware of such event, the Company shall
notify Holder in writing of the happening of any event as a result of which
the
prospectus included in a Registration Statement, as then in effect, includes
an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading,
(“Registration Default”) and use all diligent efforts to promptly prepare a
supplement or amendment to such Registration Statement and take any other
necessary steps to cure the Registration Default, (which, if such Registration
Statement is on Form S-3, may consist of a document to be filed by the Company
with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act
(as
defined below) and to be incorporated by reference in the prospectus) to correct
such untrue statement or omission, and deliver ten (10) copies of such
supplement or amendment to Holder (or such other number of copies as Holder
may
reasonably request). Failure to cure the Registration Default within five (5)
business days shall result in the Company paying liquidated damages of two
percent (2%) of the Face Amount for each thirty (30) calendar day period or
portion thereof, beginning on the date of suspension. The Company shall also
promptly notify Holder in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification
of
such effectiveness shall be delivered to Holder by facsimile on the same day
of
such effectiveness and by overnight mail), (ii) of any request by the SEC for
amendments or supplements to a Registration Statement or related prospectus
or
related information, (iii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate,
(iv)
in the event the Registration Statement is no longer effective or, (v) the
Registration Statement is stale for a period of more than five (5) Trading
Days
as a result of the Company’s failure to timely file its financials.
The
Company acknowledges that its failure to cure the Registration Default within
three (3) business days will cause the Holder to suffer damages in an amount
that will be difficult to ascertain. Accordingly, the parties agree that it
is
appropriate to include in this Agreement a provision for liquidated damages.
The
parties acknowledge and agree that the liquidated damages provision set forth
in
this section represents the parties’ good faith effort to quantify such damages
and, as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty.
It
is the
intention of the parties that interest payable under any of the terms of this
Agreement shall not exceed the maximum amount permitted under any applicable
law. If a law, which applies to this Agreement which sets the maximum interest
amount, is finally interpreted so that the interest in connection with this
Agreement exceeds the permitted limits, then: (1) any such interest shall be
reduced by the amount necessary to reduce the interest to the permitted limit;
and (2) any sums already collected (if any) from the Company which exceed the
permitted limits will be refunded to the Company. The Holder may choose to
make
this refund by reducing the amount that the Company owes under this Agreement
or
by making a direct payment to the Company. If a refund reduces the amount that
the Company owes the Holder, the reduction will be treated as a partial payment.
In case any provision of this Agreement is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it
is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Agreement will not in any way be affected
or
impaired thereby.
f.
The
Company shall use its best efforts to prevent the issuance of any stop order
or
other suspension of effectiveness of a Registration Statement, or the suspension
of the qualification of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and
to
notify Holder who holds Registrable Securities being sold of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
g. The
Company shall permit Holder and a single firm of counsel, designated as selling
shareholders' counsel by the Holder who hold a majority of the Registrable
Securities being sold, to review and comment upon a Registration Statement
and
all amendments and supplements thereto at least seven
(7)
business days prior to their filing with the SEC, and not file any document
in a
form to which such counsel reasonably objects.
The
Company shall not submit to the SEC a request for acceleration of the
effectiveness of a Registration Statement or file with the SEC a Registration
Statement or any amendment or supplement thereto without the prior approval
of
such counsel, which approval shall not be unreasonably withheld.
h. At
the
request of any Holder, the Company shall cause to be furnished to Holder, on
the
date of the effectiveness of a Registration Statement, an opinion, dated as
of
such date, of counsel representing the Company for purposes of such Registration
Statement, in the form of Exhibit D attached to the Subscription
Agreement.
i. The
Company shall make available for inspection by (i) Holder and (ii) one firm
of
attorneys and one firm of accountants or other agents retained by the Holder
(collectively, the "Inspectors") all pertinent financial and other records,
and
pertinent corporate documents and properties of the Company (collectively,
the
“Records”), as shall be reasonably deemed necessary by each Inspector, and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each Inspector
shall hold in strict confidence and shall not make any disclosure (except to
a
Holder) or use of any Record or other information which the Company determines
in good faith to be confidential, and of which determination the Inspectors
are
so notified, unless (a) the disclosure of such Records is necessary to avoid
or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the 1933 Act, (b) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body
of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this
or any other agreement of which the Inspector has knowledge. Holder agrees
that
it shall, upon learning that disclosure of such Records is sought in or by
a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential.
j. The
Company shall hold in confidence and not make any disclosure of information
concerning a Holder provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to
the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure
of
such information concerning a Holder is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt written
notice to Holder and allow Holder, at the Holder's expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.
k. The
Company shall use its best efforts to secure designation and quotation of all
the Registrable Securities covered by any Registration Statement on the
Principal Market. If, despite the Company's best efforts, the Company is
unsuccessful in satisfying the preceding sentence, it shall use its best efforts
to cause all the Registrable Securities covered by any Registration Statement
to
be listed on each other national securities exchange and automated quotation
system, if any, on which securities of the same class or series issued by the
Company are then listed, if any, if the listing of such Registrable Securities
is then permitted under the rules of such exchange or system. If, despite the
Company's best efforts, the Company is unsuccessful in satisfying the two
preceding sentences, it will use its best efforts to secure the inclusion for
quotation with Pink Sheets, LLC. The Company shall pay all fees and expenses
in
connection with satisfying its obligation under this Section 3(k).
l. The
Company shall cooperate with the Holder to facilitate the timely preparation
and
delivery of certificates (not bearing any restrictive legend) representing
the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case
may
be, as the Holder may reasonably request and registered in such names of the
Persons who shall acquire such Registrable Securities from the Holder, as the
Holder may request.
m. The
Company shall provide a transfer agent for all the Registrable Securities not
later than the Closing Date of the first Registration Statement filed pursuant
hereto.
n. If
requested by the Holder holding a majority of the Registrable Securities, the
Company shall (i) as soon as reasonably practical incorporate in a prospectus
supplement or post-effective amendment such information as Holder reasonably
determines should be included therein relating to the sale and distribution
of
Registrable Securities, including, without limitation, information with respect
to the offering of the Registrable Securities to be sold in such offering;
(ii)
make all required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or
make
amendments to any Registration Statement if reasonably requested by
Holder.
o. The
Company shall use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved
by
such other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable Securities.
p. Intentionally
omitted.
q. The
Company shall otherwise use its best efforts to comply with all applicable
rules
and regulations of the SEC in connection with any registration
hereunder.
r. Within
one (1) business day after the Registration Statement which includes Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent
for
such Registrable Securities, with copies to the Holder, confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit A. Failure to do so will result in the Face Amount
on
the Debentures to be increased by two percent (2%) per day, as liquidated
damages.
s. Subsequent
to the SEC declared the Registration Statement cleared of all comments and
the
Company's acceptance of the effectiveness of the Registration Statement, the
Company shall file a prospectus covering the resale of the Shares ("Prospectus")
within two (2) trading days. In the event the Company does not file the
Prospectus within two (2) trading days of the Effective Date, then the Company
shall pay the Holder the sum of five percent (5%) of the Face Amount due to
the
Holder for each two (2) trading day period, pro rata, compounded daily,
following the two (2) trading day period until the Prospectus is
filed
t. The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Holder of Registrable Securities pursuant to
a
Registration Statement.
4. OBLIGATIONS
OF THE HOLDER.
a. At
least
five (5) calendar days prior to the first anticipated filing date of a
Registration Statement the Company shall notify Holder in writing of the
information the Company requires from Holder. It shall be a condition precedent
to the obligations of the Company to complete the registration pursuant to
this
Agreement with respect to the Registrable Securities of the Holder that Holder
shall furnish in writing to the Company such information regarding itself,
the
Registrable Securities held by it and the intended method of disposition of
the
Registrable Securities held by it as shall reasonably be required to effect
the
registration of such Registrable Securities and shall execute such documents
in
connection with such registration as the Company may reasonably request. The
Holder covenants and agrees that, in connection with any resale of Registrable
Securities by it pursuant to a Registration Statement, it shall comply with
the
"Plan of Distribution" section of the current prospectus relating to such
Registration Statement.
b. The
Holder, by Holder's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement
hereunder.
x. Xxxxxx
agrees that, upon receipt of any notice from the Company of the happening of
any
event of the kind described in Section 3(f) or the first sentence of 3(e),
Holder will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or the first sentence of 3(e).
5. EXPENSES
OF REGISTRATION.
All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including, without limitation, all registration, listing and
qualifications fees, printing and accounting fees, and fees and disbursements
of
counsel for the Company shall be paid by the Company.
6. INDEMNIFICATION.
In
the
event any Registrable Securities are included in a Registration Statement under
this Agreement:
a. To
the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend Holder who holds such Registrable Securities, the
directors, officers, partners, employees, agents, representatives of, and each
Person, if any, who controls Holder within the meaning of the 1933 Act or the
Securities Exchange Act of 1934, as amended (the “1934 Act”), (each, an
“Indemnified Person”), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid
in
settlement or expenses, joint or several (collectively, “Claims”), incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is
or
may be a party thereto ("Indemnified Damages"), to which any of them may become
subject insofar as such Claims (or actions or proceedings, whether commenced
or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or any post-effective amendment thereto or in any filing made in
connection with the qualification of the offering under the securities or other
"blue sky" laws of any jurisdiction in which Registrable Securities are offered
("Blue Sky Filing"), or the omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which the statements therein were made,
not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in the final prospectus (as amended or supplemented, if the
Company files any amendment thereof or supplement thereto with the SEC) or
the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which
the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). Subject to the
restrictions set forth in Section 6(c) with respect to the number of legal
counsel, the Company shall reimburse the Holder and each such controlling
person, promptly as such expenses are incurred and are due and payable, for
any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out
of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus were timely made available by the Company pursuant to Section 3(c);
(ii) shall not be available to the extent such Claim is based on (a) a failure
of the Holder to deliver or to cause to be delivered the prospectus made
available by the Company or (b) the Indemnified Person's use of an incorrect
prospectus despite being promptly advised in advance by the Company in writing
not to use such incorrect prospectus; and (iii) shall not apply to amounts
paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. Such indemnity shall remain in full force and effect regardless of
any
investigation made by or on behalf of the Indemnified Person and shall survive
the resale of the Registrable Securities by the Holder pursuant to the
Registration Statement.
b. In
connection with any Registration Statement in which Holder is participating,
Holder agrees to severally and not jointly indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in Section 6(a),
the
Company, each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the meaning
of
the 1933 Act or the 1934 Act (collectively and together with an Indemnified
Person, an "Indemnified Party"), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by Holder expressly for use in connection
with such Registration Statement; and, subject to Section 6(c), Holder will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of Holder, which consent shall not be unreasonably withheld;
provided, further, however, that the Holder shall be liable under this Section
6(b) for only that amount of a Claim or Indemnified Damages as does not exceed
the net proceeds to Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the resale of the Registrable Securities
by
the Holder pursuant to the Registration Statement. Notwithstanding anything
to
the contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to
the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus were corrected on a timely basis
in
the prospectus, as then amended or supplemented.
c. Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section
6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any
indemnifying party under this Section 6, deliver to the indemnifying party
a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party
so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as
the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to
be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by
such
counsel in such proceeding. The indemnifying party shall pay for only one
separate legal counsel for the Indemnified Persons or the Indemnified Parties,
as applicable, and such counsel shall be selected by Holder holding a
majority-in-interest of the Registrable Securities included in the Registration
Statement to which the Claim relates, if the Holder is entitled to
indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with
any
negotiation or defense of any such action or claim by the indemnifying party
and
shall furnish to the indemnifying party all information reasonably available
to
the Indemnified Party or Indemnified Person which relates to such action or
claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully appraised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving
by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of
a
release from all liability in respect to such Claim. Following indemnification
as provided for hereunder, the indemnifying party shall be surrogated to all
rights of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person
or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such
action.
d. The
indemnification required by this Section 6 shall be made by periodic payments
of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.
e. The
indemnity agreements contained herein shall be in addition to (i) any cause
of
action or similar right of the Indemnified Party or Indemnified Person against
the indemnifying party or others, and (ii) any liabilities the indemnifying
party may be subject to pursuant to the law.
7. CONTRIBUTION.
To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no contribution
shall be made under circumstances where the maker would not have been liable
for
indemnification under the fault standards set forth in Section 6; (ii) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from
any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (iii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by
such seller from the sale of such Registrable Securities.
8. 8.
REPORTS UNDER THE EXHANGE ACT.
With
a
view to making available to the Investors the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that
may
at any time permit the Investors to sell securities of the Company to the public
without registration ("Rule 144") the Company agrees to:
(a)
make
and keep public information available, as those terms are understood and defined
in Rule 144;
(b)
file
with the SEC in a timely manner all reports and other documents required of
the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements (it being understood that nothing herein
shall limit the Company's obligations under Section 4(c) of the Securities
Purchase Agreement) and the filing of such reports and other documents as are
required by the applicable provisions of Rule 144; and
(c)
furnish to each Investor so long as such Investor owns Registrable Securities,
promptly upon request, (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the Securities Act and
the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of
the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested to permit the Investors
to
sell such securities pursuant to Rule 144 without registration.
9. NO
ASSIGNMENT OF REGISTRATION RIGHTS.
The
rights under this Agreement shall not be assignable.
10. AMENDMENT
OF REGISTRATION RIGHTS.
Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Holder of
the
Registrable Securities. Any amendment or waiver effected in accordance with
this
Section 10 shall be binding upon Holder and the Company. No such amendment
shall
be effective to the extent that it applies to less than all of the Holders
of
the Registrable Securities. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of
any
of this Agreement unless the same consideration also is offered to all of the
parties to this Agreement.
11. MISCELLANEOUS.
a. A
Person
is deemed to be a Holder of Registrable Securities whenever such Person owns
of
record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to
the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
b. Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided a confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
Xxxx
Xxxxx
0000
Xxxxxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
If
to the
Holder:
At
the
address listed in the Questionnaire.
Each
party shall provide five (5) business days prior notice to the other party
of
any change in address, phone number or facsimile number.
c.
Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as
a
waiver thereof.
d.
All
disputes arising under this agreement shall be governed by and interpreted
in
accordance with the laws of the Commonwealth of Massachusetts, without regard
to
principles of conflict of laws. The parties to this agreement will submit all
disputes arising under this agreement to arbitration in Boston, Massachusetts
before a single arbitrator of the American Arbitration Association (“AAA”). The
arbitrator shall be selected by application of the rules of the AAA, or by
mutual agreement of the parties, except that such arbitrator shall be an
attorney admitted to practice law in the Commonwealth of Massachusetts. No
party
to this agreement will challenge the jurisdiction or venue provisions as
provided in this section.
e.
This
Agreement and the Transaction Documents (as
defined in the Subscription Agreement)
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and
therein.
f. This
Agreement and the Transaction Documents supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
g. The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
h.
This
Agreement may be executed in two or more counterparts, all of which taken
together shall constitute one instrument. Execution and delivery of this
Agreement by exchange of facsimile copies bearing the facsimile signature of
a
party shall constitute a valid and binding execution and delivery of this
Agreement by such party. Such facsimile copies shall constitute enforceable
original documents.
i. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
j. All
consents and other determinations to be made by the Holder pursuant to this
Agreement shall be made, unless otherwise specified in this Agreement, by Holder
holding a majority of the Registrable Securities.
k. The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent and no rules of strict construction
will
be applied against any party.
12.
Waiver
The
Holder's delay or failure at any time or times hereafter to require strict
performance by Company of any undertakings, agreements or covenants shall not
waiver, affect, or diminish any right of the Holder under this Agreement to
demand strict compliance and performance herewith. Any waiver by the Holder
of
any Event of Default shall not waive or affect any other Event of Default,
whether such Event of Default is prior or subsequent thereto and whether of
the
same or a different type. None of the undertakings, agreements and covenants
of
the Company contained in this Agreement, and no Event of Default, shall be
deemed to have been waived by the Holder, nor may this Agreement be amended,
changed or modified, unless such waiver, amendment, change or modification
is
evidenced by an instrument in writing specifying such waiver, amendment, change
or modification and signed by the Holder.
13.
Payment of Penalties
Any
accrued penalties incurred herein by the Company for failure to act in a timely
manner, as described in this Agreement, shall be charged to the Face Amount
of
the Debenture (as defined in the Debenture), unless specifically noted
otherwise.
14.
Waiver of Jury Trial.
AS
A
MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION.
*
*
*
IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to
be duly executed as of the day and year first above written. Duly authorized
to
sign on behalf of:
By:
/s/Xxxx Xxxxx
Name:
Xxxx Xxxxx
Title: Chief
Executive Officer
DUTCHESS
PRIVATE EQUITIES FUND, II, L.P.
BY
ITS
GENERAL PARTNER DUTCHESS
CAPITAL
MANAGEMENT, LLC
By:
/s/Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title:
A
Managing Member
EXHIBIT
A
FORM
OF
NOTICE OF EFFECTIVENESS
OF
REGISTRATION STATEMENT
Date:
__________
[TRANSFER
AGENT]
Re: Hyperdynamics
Corp.
Ladies
and Gentlemen:
We
are
counsel to Hyperdynamics
Corp.,
a
Delaware corporation (the "Company"), and have represented the Company in
connection with that certain Subscription Agreement (the "Subscription
Agreement") entered into by and among the Company and _________________________
(the "Holder") pursuant to which the Company has agreed to issue to the Holder
shares of the Company's common stock, $.001 par value per share (the "Common
Stock") on the terms and conditions set forth in the Subscription Agreement.
Pursuant to the Subscription Agreement, the Company also has entered into a
Registration Rights Agreement with the Holder (the "Registration Rights
Agreement") pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issued or issuable under the
Subscription Agreement under the Securities Act of 1933, as amended (the "1933
Act"). In connection with the Company's obligations under the Registration
Rights Agreement, on ____________ ___, 2005, the Company filed a Registration
Statement on Form S- ___ (File No. 333-________) (the "Registration Statement")
with the Securities and Exchange Commission (the "SEC") relating to the
Registrable Securities which names the Holder as a selling shareholder
thereunder.
In
connection with the foregoing, we advise you that [a
member
of the SEC's staff has advised us by telephone that the SEC has entered an
order
declaring the Registration Statement effective]
[the
Registration Statement has become effective]
under
the 1933 Act at [enter
the time of effectiveness]
on
[enter
the date of effectiveness]
and to
the best of our knowledge, after telephonic inquiry of a member of the SEC’s
staff, no stop order suspending its effectiveness has been issued and no
proceedings for that purpose are pending before, or threatened by, the SEC
and
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.
Very
truly yours,
[Company
Counsel]
By: ____________________
|
cc:
|
[Holder]
|
