Hyperdynamics Corp. This offering consists of $1,500,000 of the Company’s 5 Year Convertible Debentures convertible into the Company’s Common Stock. SUBSCRIPTION AGREEMENT
Exhibit
10.4
____________________
____________________
This
offering consists of $1,500,000 of the Company’s 5 Year Convertible
Debentures
convertible into the
Company’s
Common Stock.
____________________
___________________
THIS
AMENDMENT IS DATED JANUARY 9, 2006 TO THE ORIGINAL AGREEMENT DATED AUGUST 12,
2005, BELOW.
SUBSCRIPTION
PROCEDURES
Convertible
Debentures of Hyperdynamics
Corp. and it's subsidiaries (the
“Company”) are being offered (the “Debentures”). This offering is being made in
accordance with the exemptions from registration provided for under Section
4(2)
of the Securities Act of 1933, as amended (the “1933 Act”) and Rule 506 of
Regulation D promulgated under the 1933 Act.
In
order
to purchase Debentures, each subscriber must complete and execute a
questionnaire (the “Questionnaire”) and a subscription agreement (the
“Subscription Agreement”). In addition, the subscriber must make a payment
pursuant to the Funds Authorization Distribution Agreement, for the amount
being
purchased or directly to the Holder. All subscriptions are subject to acceptance
by the Company, which shall not occur until the Company has returned the signed
Company Signature Page.
The
Questionnaire is designed to enable the Holder to demonstrate the minimum legal
requirements under federal and state securities laws to purchase the Debentures.
The Signature Page for the Questionnaire and the Subscription Agreement contain
representations relating to the subscription and should be reviewed carefully
by
each subscriber.
If
you
are a foreign person or foreign entity, you may be subject to a withholding
tax
equal to thirty percent (30%) of any dividends paid by the Company. In order
to
eliminate or reduce such withholding tax you must submit a properly executed
I.R.S. Form 4224 (Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United States) or
I.R.S. Form 1001 (Ownership Exemption or Reduced Trade Certificate), claiming
exemption from withholding or eligibility for treaty benefits in the form of
a
lower rate of withholding tax on interest or dividends.
Payment
must be made by wire transfer by Dutchess Private Equities Fund, II, LP (the
“Holder”) per the wire instructions that will be established. In the event of a
termination of the offering or the rejection of a subscription, subscription
funds will be returned by the Company without interest or charges.
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY
NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED
OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED
THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
To: Hyperdynamics
Corp.
This
Subscription Agreement is made between Hyperdynamics
Corp.,
a
Delaware corporation, (the “Company”), and the undersigned prospective Holder
(“Holder”) who is subscribing hereby for the Company’s convertible debentures
(the “Debentures”) on August 12, 2005. This subscription is submitted to you in
accordance with and subject to the terms and conditions described in this
Subscription Agreement, together with any Exhibits thereto, relating to an
offering (the “Offering”) of One Million Five Hundred Thousand dollars
($1,500,000) of Debentures. The Offering is limited to accredited Investors
and
is made in accordance with the exemptions from registration provided for under
Section 4(2) of the 1933 Act and Rule 506 of Regulation D promulgated under
the
1933 Act (“Regulation D”).
Whereas,
contemporaneously with the execution and delivery of this Agreement, the
partiers hereto are executing and delivering a Debenture Registration Rights
Agreement, the Debenture Agreement, Security Agreement, the Irrevocable Transfer
Agent Agreement, and Warrant Agreement (collectively, the "Transaction
Documents").
1. SUBSCRIPTION.
(a) The
closing shall be deemed to have occurred on the date in the preamble of this
document (the “Closing Date” or a “Closing”). The Company shall pay ten percent
(10%) annual coupon on the unpaid principal amount of this Debenture (the
“Debenture”) at such times and in such amounts as outlined in the Debenture
Agreement.
(b) Upon
receipt by the Company of the requisite payment for the Debentures being
purchased, the Debentures so purchased will be forwarded by the Company to
the
Holder or its broker, as listed on the signature page, and the name of such
Holder will be registered on the Debenture transfer books of the Company as
the
record owner of such Debentures.
(c) As
long
as the Holder owns the Debenture, the Holder shall have the right to change
the
terms for the balance of the Debenture it then holds, to match the terms of
any
other offering of securities made by the Company.
(d)
The
Holders shall fund one million dollars ($1,000,000) upon the initial closing
and
an additional five hundred thousand dollars ($500,000) simultaneously on the
date the registration statement covering this Offering is filed with the United
States Securities and Exchange Commission ("SEC"),.
2. REPRESENTATIONS
AND WARRANTIES OF THE HOLDER.
The
Holder hereby represents and warrants to, and agrees with, the Company as
follows:
(a) The
Holder has been furnished with, and has carefully read the applicable form
of
Debenture Registration Rights Agreement, and the Debenture Agreement
and
is
familiar with and understands the terms of the Offering. With respect to tax
and
other economic considerations involved in his investment, the Holder is not
relying on the Company. The Holder has carefully considered and has, to the
extent the Holder believes such discussion necessary, discussed with the Holder
's professional legal, tax, accounting and financial advisors the suitability
of
an investment in the Company, by purchasing the Debentures, for the Holder
's
particular tax and financial situation and has determined that the investment
being made by the Holder is a suitable investment for the Holder.
(b) The
Holder acknowledges that all documents, records, and books pertaining to this
investment which the Holder has requested have been made available for
inspection or the Holder has had access thereto.
(c) The
Holder has had a reasonable opportunity to ask questions of and receive answers
from a person or persons acting on behalf of the Company concerning the Offering
and if such opportunity was taken then all such questions have been answered
to
the full satisfaction of the Holder.
(d) The
Holder will not sell, or otherwise dispose of the Debentures or the Common
Stock
issued upon conversion of the Debentures without registration under the 1933
Act
or applicable state securities laws or compliance with an exemption therefrom
including but not limited to: Rule 144A, 144 (k) (herein after referred to
as an
"Exemption"). The Debentures have not been registered under the 1933 Act or
under the securities laws of any state. Resales of the Common Stock underlying
the Debentures or issued in payment of accrued interest on the Debentures are
to
be registered by the Company pursuant to the terms of the Debenture Registration
Rights Agreement incorporated herein and made a part hereof.
(e) The
Holder recognizes that an investment in the Debentures involves substantial
risks, including loss of the entire amount of such investment. Further, the
Holder has carefully read and considered the schedule entitled Litigation
matters attached hereto as Schedule 3(h).
(f)
The
Holder acknowledges that each certificate representing the Debentures (and
the
shares of Common Stock issued upon conversion of the Debentures, unless
registered or with an Exemption) or in payment of dividends on the Debentures
shall be stamped or otherwise imprinted with a legend substantially in the
following form:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT
(OR
ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES),
OR
(iii) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH
ACT.
If
Holder
sends a Notice of Conversion (See Exhibit A attached hereto), and provided
a
registration statement under the Securities Act of 1933 that is in effect as
to
the sale, then in such event the Company shall have its transfer agent send
Holder the appropriate number of shares of Common Stock without restrictive
legends and the Company is not subject to stop transfer instructions.
(g) If
this
Subscription Agreement is executed and delivered on behalf of a corporation:
(i)
such corporation has the full legal right and power and all authority and
approval required (a) to execute and deliver, or authorize execution and
delivery of this Subscription Agreement and all other instruments (including,
without limitation, the Debenture Registration Rights Agreement, Irrevocable
Transfer Agent Agreement, Security Agreement, Warrant Agreement and Debenture
Agreements) executed and delivered by or on behalf of such corporation in
connection with the purchase of the Debentures and (b) to purchase and hold
the
Debentures; and (ii) the signature of the party signing on behalf of such
corporation is binding upon such corporation.
(h) The
Holder is not subscribing for the Debentures as a result of, or pursuant to,
any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or meeting.
(i) The
Holder is purchasing the Debentures for its own account for investment, and
not
with a view toward the resale or distribution thereof, except pursuant to sales
registered or exempted from registration under the 1933 Act. The Holder has
not
offered or sold any portion of the Debentures being acquired nor does the Holder
have any present intention of dividing the Debentures with others or of selling,
distributing or otherwise disposing of any portion of the Debentures either
currently or after the passage of a fixed or determinable period of time or
upon
the occurrence or non-occurrence of any predetermined event or circumstance
in
violation of the 1933 Act provided, however, that by making the representations
herein, Holder does not agree to hold any of the Debentures for any minimum
or
other specific term and reserves the right to dispose of the Debentures at
any
time in accordance with or pursuant to a registration statement or an exemption
under the 1933 Act. Holder is neither an underwriter of, nor a dealer in, the
Debentures or the Common Stock issuable upon conversion thereof or upon the
payment of dividends thereon and is not participating in the distribution or
resale of the Debentures or the Common Stock issuable upon conversion or
exercise thereof.
(j) The
Holder or the Holder's representatives, as the case may be, has such knowledge
and experience in financial, tax and business matters so as to enable the Holder
to utilize the information made available to the Holder in connection with
the
Offering to evaluate the merits and risks of an investment in the Debentures
and
to make an informed investment decision with respect thereto.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
Except
as
set forth in the Schedules attached hereto, the Company represents and warrants
to the Holder that:
a.
Organization
and Qualification.
The
Company and its “SUBSIDIARIES” (which for purposes of this Subscription
Agreement means any entity in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest) (a complete list of which
is set forth in Schedule 3(a)) are corporations duly organized and validly
existing in good standing under the laws of the respective jurisdictions of
their incorporation, and have the requisite corporate power and authorization
to
own their properties and to carry on their business as now being conducted.
Both
the Company and its Subsidiaries are duly qualified to do business and are
in
good standing in every jurisdiction in which their ownership of property or
the
nature of the business conducted by them makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect. As used in this Subscription
Agreement, “MATERIAL ADVERSE EFFECT” means any material adverse effect on the
business, properties, assets, operations, results of operations, financial
condition or prospects of the Company and its Subsidiaries, if any, taken as
a
whole, or on the transactions contemplated hereby or by the agreements and
instruments to be entered into in connection herewith, or on the authority
or
ability of the Company to perform its obligations under the Transaction
Documents (as defined in Section 3(b)below).
b.
Authorization;
Enforcement; Compliance with Other Instruments.
(i) The
Company has the requisite corporate power and authority to enter into and
perform this Subscription Agreement, the Debenture Registration Rights
Agreement, Warrant Agreement, Security Agreement, Stock Transfer Agent Agreement
and the Debenture Agreement, and each of the other agreements entered into
by
the parties hereto in connection with the transactions contemplated by this
Subscription Agreement (collectively, the “TRANSACTION DOCUMENTS”), and to issue
the Debentures in accordance with the terms hereof and thereof, (ii) the
execution and delivery of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby,
including without limitation the reservation for issuance and the issuance
of
the Debentures pursuant to this Subscription Agreement, have been duly and
validly authorized by the Company's Board of Directors and no further consent
or
authorization is required by the Company, its Board of Directors, or its
shareholders, (iii) the Transaction Documents have been duly and validly
executed and delivered by the Company, and (iv) the Transaction Documents
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may
be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and
remedies.
c.
Capitalization.
As of
the date hereof, the authorized capital stock of the Company consists of
250,000,000 shares of Common Stock authorized, of which as of the date hereof,
approximately 42,059,683 shares are issued and outstanding, All of such
outstanding shares have been, or upon issuance will be, validly issued and
are
fully paid and nonassessable. Except as disclosed in Schedule 3(c) which is
attached hereto and made a part hereof, (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company, (ii) there are no
outstanding debt securities, (iii) there are no outstanding shares of capital
stock, options, warrants, scrip, rights to subscribe to, calls or commitments
of
any character whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company
or
any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, (iv) there are no agreements
or
arrangements under which the Company or any of its Subsidiaries is obligated
to
register the sale of any of their securities under the 1933 Act (except the
Debenture Registration Rights Agreement), (v) there are no outstanding
securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance
of
the Securities as described in this Subscription Agreement, (vii) the Company
does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or agreement and (viii) there is no dispute
as to
the class of any shares of the Company's capital stock. The Company has
furnished to the Holder, or the Holder has had access through XXXXX to, true
and
correct copies of the Company's Articles of Incorporation, as in effect on
the
date hereof (the “ARTICLES OF INCORPORATION”), and the Company's By-laws, as in
effect on the date hereof (the “BY-LAWS ‘), and the terms of all securities
convertible into or exercisable for Common Stock and the material rights of
the
Holder thereof in respect thereto.
d. Issuance
of Debentures. A
sufficient number of Debentures issuable pursuant to this Subscription
Agreement, but not more than 4.99% of the shares of Common Stock outstanding
as
of the date hereof (if the Company becomes listed on Nasdaq or the American
Stock Exchange), has been duly authorized and reserved for issuance pursuant
to
this Subscription Agreement. Upon issuance in accordance with this Subscription
Agreement, the Debentures will be validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof.
In
the event the Company cannot register a sufficient number of 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.
e.
No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
and
thereby will not (i) result in a violation of the Articles of Incorporation,
any
Certificate of Designations, Preferences and Rights of any outstanding series
of
preferred stock of the Company or the By-laws or (ii) conflict with, or
constitute a material default (or an event which with notice or lapse of time
or
both would become a material default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
contract, indenture mortgage, indebtedness or instrument to which the Company
or
any of its Subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree, including United States federal and
state
securities laws and regulations and the rules and regulations of the principal
securities exchange or trading market on which the Common Stock is traded or
listed (the “Principal Market”), applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected. Except as disclosed in Schedule 3(e), neither
the Company nor its Subsidiaries is in violation of any term of, or in default
under, the Articles of Incorporation, any Certificate of Designations,
Preferences and Rights of any outstanding series of preferred stock of the
Company or the By-laws or their organizational charter or by-laws, respectively,
or any contract, agreement, mortgage, indebtedness, indenture, instrument,
judgment, decree or order or any statute, rule or regulation applicable to
the
Company or its Subsidiaries, except for possible conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations that
would
not individually or in the aggregate have a Material Adverse Effect. The
business of the Company and its Subsidiaries is not being conducted, and shall
not be conducted, in violation of any law, statute, ordinance, rule, order
or
regulation of any governmental authority or agency, regulatory or
self-regulatory agency, or court, except for possible violations the sanctions
for which either individually or in the aggregate would not have a Material
Adverse Effect. Except as specifically contemplated by this Subscription
Agreement and as required under the 1933 Act, the Company is not required to
obtain any consent, authorization, permit or order of, or make any filing or
registration (except the filing of a registration statement) with, any court,
governmental authority or agency, regulatory or self-regulatory agency or other
third party in order for it to execute, deliver or perform any of its
obligations under, or contemplated by, the Transaction Documents in accordance
with the terms hereof or thereof. All consents, authorizations, permits, orders,
filings and registrations which the Company is required to obtain pursuant
to
the preceding sentence have been obtained or effected on or prior to the date
hereof and are in full force and effect as of the date hereof. Except as
disclosed in Schedule 3(e), the Company and its Subsidiaries are unaware of
any
facts or circumstances which might give rise to any of the foregoing. The
Company is not, and will not be, in violation of the listing requirements of
the
Principal Market as in effect on the date hereof and on each of the Closing
Dates and is not aware of any facts which would reasonably lead to delisting
of
the Common Stock by the Principal Market in the foreseeable future.
f.
SEC
Documents; Financial Statements.
Since
the date hereof, the Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it with the Securities and Exchange
Commission (“SEC”) pursuant to the reporting requirements of the Securities and
Exchange Act of 1934 (“1934 Act”) (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein being hereinafter
referred to as the "SEC DOCUMENTS"). The Company has delivered to the Holder
or
its representatives, or they have had access through XXXXX, to true and complete
copies of the SEC Documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and
the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with
the
SEC, contained any untrue statement of a material fact or omitted 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. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have
been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in
all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other written information provided by or on behalf of the
Company to the Holder which is not included in the SEC Documents, including,
without limitation, information referred to in Section 3(d) of this Subscription
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary to make the statements therein, in the light of
the
circumstance under which they are or were made, not misleading.
g.
Absence
of Certain Changes.
Except
as disclosed in Schedule 3(g) or the SEC Documents filed at least five (5)
days
prior to the date hereof, there has been no change or development in the
business, properties, assets, operations, financial condition, results of
operations or prospects of the Company or its Subsidiaries which has had or
reasonably could have a Material Adverse Effect, except
as
to litigation in connection with USOil, and events unfolding in the Republic
of
Guinea elated to the Production Sharing Agreement between Guinea and USOil.
The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company
or
its Subsidiaries have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings
h.
Absence
of Litigation.
Except
as set forth in the Company’s SEC filings, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
the
executive officers of Company or any of its Subsidiaries, threatened against
or
affecting the Company, the Common Stock or any of the Company's Subsidiaries
or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, in which an adverse decision could have a Material
Adverse Effect, except
litigation in connection with USOil, and possible legal proceedings regarding
events unfolding in the Republic of Guinea related to the Production and Sharing
Agreement between Guinea and USOil.
i.
Acknowledgment
Regarding the Purchase of Debentures.
The
Company acknowledges and agrees that the Holder is acting solely in the capacity
of an arm's length investor with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. The Company further acknowledges
that the Holder is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and
the
transactions contemplated hereby and thereby and any advice given by the Holder
or any of its respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby
is
merely incidental to the Holder's purchase of the Debentures. The Company
further represents to the Holder that the Company's decision to enter into
the
Transaction Documents has been based solely on the independent evaluation by
the
Company and its representatives.
j. Intentionally
omitted.
k.
Employee
Relations.
Neither
the Company nor any of its Subsidiaries is involved in any union labor dispute
nor, to the knowledge of the Company or any of its Subsidiaries, is any such
dispute threatened. Neither the Company nor any of its Subsidiaries is a party
to a collective bargaining agreement, and the Company and its Subsidiaries
believe that relations with their employees are good. No executive officer
(as
defined in Rule 501(f) of the 0000 Xxx) has notified the Company that such
officer intends to leave the Company's employ or otherwise terminate such
officer's employment with the Company.
l.
Intellectual
Property Rights.
All
patents, patent applications, trademark registrations and applications for
trademark registration held by the Company are owned free and clear of all
mortgages, liens, charges or encumbrances whatsoever. No licenses have been
granted with respect to these items and the Company and its Subsidiaries do
not
have any knowledge of any infringement by the Company or its Subsidiaries of
trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service xxxx registrations, trade secret
or other similar rights of others, and, except as set forth on Schedule 3(l),
there is no claim, action or proceeding being made or brought against, or to
the
Company's knowledge, being threatened against, the Company or its Subsidiaries
regarding trademark, trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service xxxx registrations, trade secret
or other infringement; and the Company and its Subsidiaries are unaware of
any
facts or circumstances which might give rise to any of the foregoing. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual
properties.
m.
Environmental
Laws.
The
Company and its Subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license
or
approval where, in each of the three foregoing cases, the failure to so comply
would have, individually or in the aggregate, a Material Adverse
Effect.
n.
Title.
The
Company and its Subsidiaries have good and marketable title in fee simple to
all
real property and good and marketable title to all personal property owned
by
them which is material to the business of the Company and its Subsidiaries,
in
each case free and clear of all liens, encumbrances and defects except such
as
are described in Schedule 3(n) or such as do not materially affect the value
of
such property and do not interfere with the use made and proposed to be made
of
such property by the Company or any of its Subsidiaries. Any real property
and
facilities held under lease by the Company or any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions
as
are not material and do not interfere with the use made and proposed to be
made
of such property and buildings by the Company and its Subsidiaries.
o.
Insurance.
The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company
nor
any such Subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as
may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.
p.
Regulatory
Permits.
The
Company and its Subsidiaries have in full force and effect all certificates,
approvals, authorizations and permits from the appropriate federal, state,
local
or foreign regulatory authorities and comparable foreign regulatory agencies,
necessary to own, lease or operate their respective properties and assets and
conduct their respective businesses, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation
or
modification of any such certificate, approval, authorization or permit, except
for such certificates, approvals, authorizations or permits which if not
obtained, or such revocations or modifications which, would not have a Material
Adverse Effect.
q.
Internal
Accounting Controls.
The
Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and
to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
r.
No
Materially Adverse Contracts, Etc.
Neither
the Company nor any of its Subsidiaries is subject to any charter, corporate
or
other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of the Company's officers has or is expected in the future
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement which in the judgment
of
the Company's officers has or is expected to have a Material Adverse
Effect.
s.
Tax
Status.
The
Company’s consolidated 2004 federal income tax return, the Company and each of
its Subsidiaries has made or filed all United States federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to which it is subject (unless and only to the extent that the Company and
each
of its Subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) and has paid all taxes
and
other governmental assessments and charges that are material in amount, shown
or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to
the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority
of
any jurisdiction, and the officers of the Company know of no basis for any
such
claim.
t.
Certain
Transactions.
Except
as set forth in the SEC Documents filed at least ten days prior to the date
hereof and except for arm's length transactions pursuant to which the Company
makes payments in the ordinary course of business upon terms no less favorable
than the Company could obtain from third parties and other than the grant of
stock options disclosed on Schedule 3(c), none of the officers, directors,
or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real
or personal property to or from, or otherwise requiring payments to or from
any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
u.
Dilutive
Effect.
The
Company understands and acknowledges that the number of shares of Common Stock
issuable upon purchases pursuant to this Subscription Agreement will increase
in
certain circumstances including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines following
the effective date of the registration statement covering the Common Stock
underlying the Debentures (the “Effective Date”). The Company’s executive
officers and directors have studied and fully understand the nature of the
transactions contemplated by this Subscription Agreement and recognize that
they
have a potential dilutive effect. The board of directors of the Company has
concluded, in its good faith business judgment that such issuance is in the
best
interests of the Company. The Company specifically acknowledges that, subject
to
such limitations as are expressly set forth in the Transaction Documents, its
obligation to issue shares of Common Stock upon purchases pursuant to this
Subscription Agreement is absolute and unconditional regardless of the dilutive
effect that such issuance may have on the ownership interests of other
shareholders of the Company.
4. COVENANTS
OF THE COMPANY
a.
Best
Efforts.
The
Company shall use its best efforts timely to satisfy each of the conditions
to
be satisfied by it as provided in this Subscription Agreement.
b.
Blue
Sky.
The
Company shall, at its sole cost and expense, make all filings and reports
relating to the offer and sale of the Debentures and the Common Stock underlying
the Debentures as required under the applicable securities or “Blue Sky” laws of
such states of the United States as specified by the Holder.
c.
Reporting
Status.
Until
the earlier of (i) the date that the Holder may sell all of the Common Stock
underlying the shares acquired pursuant to this Subscription Agreement without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto), or (ii) the date on which the Holder shall have sold all the Common
Stock underlying the Debentures, the Company shall file all reports required
to
be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as a reporting company under the 1934 Act.
d. Use
of
Proceeds.
The
Company shall use the entire proceeds from this Debenture exclusively to further
the growth and interest of the Company, specifically for the development of
a)
Oil production and drilling in the United States of America or b) the Oil,
Gas
and Mineral leases including but not limited to the Company’s interest in the
following collateralized leases dated October 1st, 2004 with: Xxxxxxxxx Xxxxxxx
Xxxxx of Xxxx, Louisiana for Xxxxxxx 0, Xxxxxxxx 0 Xxxxx, Xxxxx 0 Xxxx, the
north one-half of the Northwest quarter less four acres, comprising of sixteen
(16) acres, more or less and
the
development of the Oil, Gas and Mineral lease dated October 13, 2004 with
Xxxxxxx X. Xxxxxx and Xxxxxxx X Xxxxxx of Xxxx, Louisiana for Xxxxxxx 0,
Xxxxxxxx 0 Xxxxx, Xxxxx 0 Xxxx, the southeast quarter of the northwest quarter
including Lot 23B, and 23A; . Any other use of the funds contemplated herein,
shall be considered a breach of contract and an event of Default.
e. Conditions
to Closing, The
Company shall sign the Transaction Documents with Dutchess Private Equities
Fund, II, L.P.
f.
Financial
Information.
The
Company agrees to make available to the Holder via XXXXX or other electronic
means the following: (i) within five (5) business days after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-KSB, its Quarterly Reports
on Form 10-QSB, any Current Reports on Form 8-K and any Registration Statements
or amendments filed pursuant to the 1933 Act; (ii) on the same day as the
release thereof, facsimile copies of all press releases issued by the Company
or
any of its Subsidiaries, (iii) copies of any notices and other information
made
available or given to the shareholders of the Company generally,
contemporaneously with the making available or giving thereof to the
shareholders and (iv) within two (2) calendar days of filing or delivery
thereof, copies of all documents filed with, and all correspondence sent to,
the
Principal Market, any securities exchange or market, or the National Association
of Securities Dealers, Inc.
g. Reservation
of Common Stock.
Subject
to the following sentence, the Company shall take all action necessary to at
all
times have authorized, and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the issuance of the Common
Stock
underlying the Debentures. In the event that the Company determines that it
does
not have a sufficient number of authorized shares of Common Stock to reserve
and
keep available for issuance, the Company shall use its best efforts to increase
the number of authorized shares of Common Stock by seeking shareholder approval
for the authorization of such additional shares. The Holder shall have the
right
to determine the amount of shares to be re-registered to satisfy the terms
of
the Agreement. Such amount must be usual or customary.
h.
Listing.
The
Company shall promptly secure the listing of all of the Common Stock underlying
the Debentures upon the Principal Market and each other national securities
exchange and automated quotation system, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall
maintain, such listing. The Company shall maintain the Common Stock's
authorization for quotation on the Principal Market, unless the Holder and
the
Company agree otherwise. Neither the Company nor any of its Subsidiaries shall
take any action which would be reasonably expected to result in the delisting
or
suspension of the Common Stock on the Principal Market (excluding suspensions
of
not more than one trading day resulting from business announcements by the
Company). The Company shall promptly provide to the Holder copies of any notices
it receives from the Principal Market regarding the continued eligibility of
the
Common Stock for listing on such automated quotation system or securities
exchange. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section.
i. Transactions
With Affiliates.
The
Company shall not, and shall cause each of its Subsidiaries not to, enter into,
amend, modify or supplement, or permit any Subsidiary to enter into, amend,
modify or supplement, any agreement, transaction, commitment or arrangement
with
any of its or any Subsidiary's officers, directors, persons who were officers
or
directors at any time during the previous two years, shareholders who
beneficially own five percent (5%) or more of the Common Stock, or affiliates
or
with any individual related by blood, marriage or adoption to any such
individual or with any entity in which any such entity or individual owns a
five
percent (5%) or more beneficial interest (each a “RELATED PARTY”) during the
Lock Up Period; except for (i) customary employment arrangements and benefit
programs on reasonable terms (including changes currently under discussion
with
the Company's Board of Directors concerning the compensation, to be payable
in
stock, of the Chairman of the Board), (ii) any agreement, transaction,
commitment or arrangement on an arms-length basis on terms no less favorable
than terms which would have been obtainable from a person other than such
Related Party, or (iii) any agreement, transaction, commitment or arrangement
which is approved by a majority of the disinterested directors of the Company.
For purposes hereof, any director who is also an officer of the Company or
any
Subsidiary of the Company shall not be a disinterested director with respect
to
any such agreement, transaction, commitment or arrangement. “AFFILIATE” for
purposes hereof means, with respect to any person or entity, another person
or
entity that, directly or indirectly, (i) has a five percent (5%) or more equity
interest in that person or entity, (ii) has five percent (5%) or more common
ownership with that person or entity, (iii) Controls that person or entity,
or
(iv) shares common control with that person or entity. “CONTROL” or "CONTROLS"
for purposes hereof means that a person or entity has the power, direct or
indirect, to conduct or govern the policies of another person or
entity.
j.
Corporate
Existence.
The
Company shall use its commercially reasonable best efforts to preserve and
continue the corporate existence of the Company.
k. Notice
of Certain Events Affecting Registration.
The
Company shall promptly notify Holder upon the occurrence of any of the following
events in respect of a registration statement or related prospectus covering
the
Common Stock underlying the Debentures: (i) receipt of any request for
additional information by the SEC or any other federal or state governmental
authority during the period of effectiveness of the registration statement
for
amendments or supplements to the registration statement or related prospectus;
(ii) the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of any registration
statement or the initiation of any proceedings for that purpose; (iii) receipt
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Common Stock underlying the
Debentures for sale in any jurisdiction or the initiation or threatening of
any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in such registration statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
registration statement, related prospectus or documents so that, in the case
of
a registration statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case
of
the related prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the registration statement
would be appropriate, and the Company shall promptly make available to Holder
any such supplement or amendment to the related prospectus.
l.
Indemnification.
In
consideration of the Holder’s execution and delivery of the this Agreement and
the Debenture Registration Rights Agreement and acquiring the Debentures
hereunder and in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless the Holder and all of their shareholders, officers, directors,
employees and direct or indirect investors and any of the foregoing person's
agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any
such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents
or
any other certificate, instrument or document contemplated hereby or thereby,
(ii) any breach of any covenant, agreement or obligation of the Company
contained in the Transaction Documents or any other certificate, instrument
or
document contemplated hereby or thereby, (iii) any cause of action, suit or
claim brought or made against such Indemnitee by a third party and arising
out
of or resulting from the execution, delivery, performance or enforcement of
the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (iv) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of the issuance
of the Debentures or (v) the status of the Holder as an investor in the Company,
except insofar as any such untrue statement, alleged untrue statement, omission
or alleged omission is made in reliance upon and in conformity with written
information furnished to the Company by the Holder which is specifically
intended by the Holder for use in the preparation of any such Registration
Statement, preliminary prospectus or prospectus. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction
of
each of the Indemnified Liabilities which is permissible under applicable law.
The indemnity provisions contained herein shall be in addition to any cause
of
action or similar rights the Holder may have, and any liabilities to which
the
Holder may be subject.
m. Reimbursement.
If (i)
Holder, other than by reason of its gross negligence or willful misconduct,
becomes involved in any capacity in any action, proceeding or investigation
brought by any shareholder of the Company, in connection with or as a result
of
the consummation of the transactions contemplated by the Transaction Documents,
or if Holder is impleaded in any such action, proceeding or investigation by
any
person, or (ii) Holder, other than by reason of its gross negligence or willful
misconduct or by reason of its trading of the Common Stock in a manner that
is
illegal under the federal securities laws, becomes involved in any capacity
in
any action, proceeding or investigation brought by the SEC against or involving
the Company or in connection with or as a result of the consummation of the
transactions contemplated by the Transaction Documents, or if Holder is
impleaded in any such action, proceeding or investigation by any person, then
in
any such case, the Company will reimburse Holder for its reasonable legal and
other expenses (including the cost of any investigation and preparation)
incurred in connection therewith, as such expenses are incurred. In addition,
other than with respect to any matter in which Holder is a named party, the
Company will pay to Holder the charges, as reasonably determined by Holder,
for
the time of any officers or employees of Holder devoted to appearing and
preparing to appear as witnesses, assisting in preparation for hearings, trials
or pretrial matters, or otherwise with respect to inquiries, hearing, trials,
and other proceedings relating to the subject matter of this Subscription
Agreement. The reimbursement obligations of the Company under this section
shall
be in addition to any liability which the Company may otherwise have, shall
extend upon the same terms and conditions to any affiliates of Holder that
are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees, attorneys, accountants, auditors and controlling
persons (if any), as the case may be, of Holder and any such affiliate, and
shall be binding upon and inure to the benefit of any successors of the Company,
Holder and any such affiliate and any such person.
n.
Transfer Agent. The Company covenants and agrees that, in the event that the
Company's agency relationship with the transfer agent should be terminated
for
any reason prior to the Maturity Date (as defined in the Debenture Agreement),
the Company shall immediately appoint a new transfer agent. and shall require
that the new transfer agent execute and agree to be bound by the terms of the
Irrevocable Transfer Agent Instructions (as defined herein). The Company shall
be up to date with all payments to the transfer agent. , and continue to pay
transfer agent as outlined in the Irrevocable Transfer Agent
Agreement.
5. OPINION
LETTER/BOARD RESOLUTION
Prior
to
or on the Closing Date the Company shall deliver to the Holder an opinion letter
signed by counsel for the Company in the form attached hereto as Exhibit D.
Prior
to
or on the Closing Date the Company shall deliver to the Holder a signed Board
Resolution authorizing this Offering, which shall be attached hereto as Exhibit
E.
a.
144
Opinions
If
the
Company’s counsel fails to provide a Rule 144 opinion letter in a timely manner,
then the Company shall: (a) pay the Investor’s counsel to write said Rule 144
opinion letter; and (b) instruct the designated transfer agent to accept same
Rule 144 Opinion letter.
6. DELIVERY
INSTRUCTIONS; FEES
The
Debentures being purchased hereunder shall be delivered to Dutchess Private
Equities Fund, L.P., II, on the Closing Date at which time funds will be wired
to the Company and the Debentures will be delivered to the Holder, per the
Holder’s instructions.
7. UNDERSTANDINGS.
The
undersigned understands, acknowledges and agrees with the Company as
follows:
FOR
ALL
SUBSCRIBERS:
a. This
Subscription may be rejected, in whole or in part, by the Company in its sole
and absolute discretion at any time before the date set for Closing unless
the
Company has given notice of acceptance of the undersigned’s subscription by
signing this Subscription Agreement and delivering it to Holder.
b. No
U.S.
federal or state agency or any agency of any other jurisdiction has made any
finding or determination as to the fairness of the terms of the Offering for
investment nor any recommendation or endorsement of the Debentures or the
Company.
c. The
representations, warranties and agreements of the undersigned and the Company
contained herein shall be true and correct in all material respects on and
as of
the date of the sale of the Debentures as if made on and as of such date and
shall survive the execution and delivery of this Subscription Agreement and
the
purchase of the Debentures.
d. In
making
an investment decision, Holders must rely on their own examination of the
Company and the terms of the Offering, including the merits and risks involved.
The shares have not been recommended by any federal or state securities
commission or regulatory authority. Furthermore, the foregoing authorities
have
not confirmed the accuracy or determined the adequacy of this document. Any
representation to the contrary is a criminal offense.
e. The
Offering is intended to be exempt from registration by virtue of Section 4(2)
of
the 1933 Act and the provisions of Regulation D thereunder, which is in part
dependent upon the truth, completeness and accuracy of the statements made
by
the undersigned herein and in the Questionnaire.
f. It
is
understood that in order not to jeopardize the Offering’s exempt status under
Section 4(2) of the 1933 Act and Regulation D, any Holder may, at a minimum,
be
required to fulfill the investor suitability requirements
thereunder.
g. The
shares may not be resold except as permitted under the securities act and
applicable state securities laws, pursuant to registration or exemption
therefrom. Holder should be aware that they will be required to bear the
financial risks of this investment for an indefinite period of
time.
|
8.
|
DISPUTES
SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS
LAW
|
a.
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.
9. MISCELLANEOUS.
a. Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Subscription 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:
Hyderdynamics
Corporation
0000
Xxxxxxxxx
Xxxxx
0000
Xxxxxxx,
XX 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.
b. All
pronouns and any variations thereof used herein shall be deemed to refer to
the
masculine, feminine, impersonal, singular or plural, as the identity of the
person or persons may require.
c. Neither
this Subscription Agreement nor any provision hereof shall be waived, modified,
changed, discharged, terminated, revoked or canceled, except by an instrument
in
writing signed by the party effecting the same against whom any change,
discharge or termination is sought.
d. Notices
required or permitted to be given hereunder shall be in writing and shall be
deemed to be sufficiently given when personally delivered or sent by facsimile
transmission: (i) if to the Company, at it’s executive offices or (ii) if to the
Holder, at the address for correspondence set forth in the Questionnaire, or
at
such other address as may have been specified by written notice given in
accordance with this paragraph.
e. This
Subscription Agreement shall be enforced, governed and construed in all respects
in accordance with the laws of the Commonwealth of Massachusetts, as such laws
are applied by Massachusetts courts to agreements entered into, and to be
performed in, Massachusetts by and between residents of Massachusetts, and
shall
be binding upon the undersigned, the undersigned's heirs, estate and legal
representatives and shall inure to the benefit of the Company and its
successors. If any provision of this Subscription Agreement is invalid or
unenforceable under any applicable statue or rule of law, then such provisions
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall
not
affect the validity or enforceability of any other provision
hereof.
f. This
Agreement shall not be assignable.
g. This
Subscription Agreement, together with Exhibits A, B, C, D and E attached hereto
and made a part hereof, constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and may be amended only by
a
writing executed by both parties hereto.
h. This
Subscription Agreement may be executed in two or more counterparts, all of
which
taken together shall constitute one instrument. Execution and delivery of this
Subscription Agreement by exchange of facsimile copies bearing the facsimile
signature of a party shall constitute a valid and binding execution and delivery
of this Subscription Agreement by such party. Such facsimile copies shall
constitute enforceable original documents.
10.
Transfer Agent Instructions
The
Company shall issue the Irrevocable Transfer Agent Instructions to its transfer
agent irrevocably appointing Dutchess Capital Management, LLC and its managing
members ("DCM"), as its agent for purpose of having certificates issued,
registered in the name of the Holder or its respective nominee(s), for the
issuance of Shares representing such amounts from the respective for conversions
or warrants, as specified from time to time by the Holder to the Company upon
the Conversion Date (as defined in the Debenture Agreement), and for any and
all
Liquidated Damages, if any (as this term is defined in the Debenture
Registration Rights Agreement). DCM shall be paid a cash fee of Fifty Dollars
($50) for every occasion they act pursuant to the Irrevocable Transfer Agent
Instructions. The Company shall not change its transfer agent without the
express written consent of the Holder, which may be withheld by the Holder
in
its sole discretion. The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 10, will
be
given by the Company to its transfer agent and that the issuance of Shares
shall
otherwise be freely transferable on the books and records of the Company as
and
to the extent provided in this Agreement and the Debenture Registration Rights
Agreement. Nothing in this Section 10 shall affect in any way the Holder's
obligations and agreement to comply with all applicable securities laws upon
resale of Shares. If the Holder provides the Company with an opinion of counsel,
in form, scope and substance customary for opinions of counsel in comparable
transactions to the effect that registration of a resale by the Holder of any
of
the Conversion Shares is not required under the 1933 Act, the Company shall
within two (2) business days instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by the Holder.
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Holder by vitiating the intent and purpose of
the
transaction contemplated hereby. Accordingly, the Company acknowledges that
the
remedy at law for a breach of its obligations under this Section 10 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section 10, that the Holder shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity
of
showing economic loss and without any bond or other security being required.
11.
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.
12.
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.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK)
QUESTIONNAIRE
The
information contained in this Questionnaire is being furnished in order to
determine whether the undersigned’s subscription to purchase the Debentures
described in the Subscription Agreement may be accepted.
ALL
INFORMATION CONTAINED IN THIS QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY.
The
undersigned understands, however, that the Company may present this
Questionnaire to such parties as it deems appropriate if called upon to
establish that the proposed offer and sale of the Securities is exempt from
registration under the 1933 Act, as amended. Further, the undersigned
understands that the offering is required to be reported to the Securities
and
Exchange Commission, NASDAQ and to various state securities and “blue sky”
regulators.
IN
ADDITION TO SIGNING THE SIGNATURE PAGE, IF REQUESTED BY THE COMPANY, THE
UNDERSIGNED MUST COMPLETE FORM W-9.
I. PLEASE
CHECK EACH OF THE STATEMENTS BELOW THAT APPLIES.
1. The
undersigned: (a) has total assets in excess of $5,000,000; (b) was not formed
for the specific purpose of acquiring the securities and (c) has its principal
place of business in ___________.
|
2.
|
The
undersigned is a natural person whose individual net worth* or joint
net
worth with his or her spouse exceeds
$1,000,000.
|
|
3.
|
The
undersigned is a natural person who had an individual income* in
excess of
$200,000 in each of the two most recent years and who reasonably
expects
an individual income in excess of $200,000 in the current year. Such
income is solely that of the undersigned and excludes the income
of the
undersigned’s spouse.
|
|
4.
|
The
undersigned is a natural person who, together with his or her spouse,
has
had a joint income* in excess of $300,000 in each of the two most
recent
years and who reasonably expects a joint income in excess of $300,000
in
the current year.
|
* For
purposes of this Questionnaire, the term “net worth” means the excess of total
assets over total liabilities. In determining “income”, an investor should add
to his or her adjusted gross income any amounts attributable to tax-exempt
income received, losses claimed as a limited partner in any limited partnership,
deductions claimed for depletion, contributions to XXX or Xxxxx retirement
plan,
alimony payments and any amount by which income from long-term capital gains
has
been reduced in arriving at adjusted gross income.
5. The
undersigned is:
(a) a
bank as
defined in Section 3(a)(2) of the 1933 Act; or
(b) a
savings
and loan association or other institution as defined in Section 3(a)(5)(A)
of
the 1933 Act whether acting in its individual or fiduciary capacity;
or
(c) a
broker
or dealer registered pursuant to Section 15 of the 1934 Act; or
(d) an
insurance company as defined in Section 2(13) of the 1933 Act; or
(e) An
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of the Investment
Company Act of 1940; or
(f) a
small
business investment company licensed by the U.S. Small Business Administration
under Section 301 (c) or (d) of the Small Business Investment Act of 1958;
or
|
X
|
6.
|
The
undersigned is an entity in which all of the equity owners are accredited
investors.
|
II. HOLDER
INFORMATION.
Name
of
Entity ___Dutchess
Private Equities Fund, II, L.P._
Person’s
Name Xxxxxxx
Xxxxxxxx
Title:_Managing
Member
State
of
Organization ____Delaware___________________
Principal
Business Address ___312
Stuart St, Third Floor__
City,
State, Zip Code ______Boston,
MA 02116__________
Taxpayer
Identification Number _____________________
- Phone
__000-000-0000________
Fax ___000-000-0000___
Send
Correspondence to:
_______________________________________________
_______________________________________________
_______________________________________________
HDY.SUB.AUGUST.2005.FINAL.JANUARY.2006.REVISION
SIGNATURE
PAGE
Your
signature on this Signature Page evidences your agreement to be bound by the
Questionnaire, Subscription Agreement and Debenture Registration Rights
Agreement.
1. The
undersigned hereby represents that (a) the information contained in the
Questionnaire is complete and accurate and (b) the undersigned will
notify
Company
immediately if any material change in any of the information occurs prior to
the
acceptance of the undersigned’s subscription and will promptly send Company
written
confirmation of such change.
2. The
undersigned signatory hereby certifies that he/she has read and understands
the
Subscription Agreement and Questionnaire, and the representations made by the
undersigned in the Subscription Agreement and Questionnaire are true and
accurate.
$1,500,000 August
12, 2005
______________________________ ________________________
Amount
of
Debentures being purchased Date
By: /s/Xxxxxxx
X. Xxxxxxxx
(Signature)
Name:
Xxxxxxx
Xxxxxxxx
----------------------------------------------
(Please
Type or Print)
Title:
Managing Member,
Dutchess
Capital Management, LLC;
General
Partner to:
Dutchess
Private Equities Fund II, LP
----------------------------------------------
(Please
Type or Print)
COMPANY
ACCEPTANCE PAGE
This
Subscription Agreement accepted and agreed as amended on January 9, 2006 to
the
original Subscription Agreement 12th day of August, 2005.
By
Hyperdynamics Corp.
and duly
authorized to sign on behalf of the Company:
By:
/s/Xxxx Xxxxx
Xxxx
Xxxxx, CEO
LIST
OF
EXHIBITS
-----------------
EXHIBIT
A Notice
of
Conversion (INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN
THE
COMPANY AND THE INVESTOR)
EXHIBIT
B Debenture
Registration Rights Agreement(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST
12, 2005 BETWEEN THE COMPANY AND THE INVESTOR)
EXHIBIT
C Debenture
Agreement(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN
THE
COMPANY AND THE INVESTOR)
EXHIBIT
D Opinion
of Company's Counsel(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005
BETWEEN THE COMPANY AND THE INVESTOR)
EXHIBIT
E Board
Resolution(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN
THE
COMPANY AND THE INVESTOR)
LIST
OF
SCHEDULES
-----------------
Schedule
3(a) Subsidiaries
(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN THE COMPANY
AND THE INVESTOR)
Schedule
3(c) Capitalization
(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN THE COMPANY
AND THE INVESTOR)
Schedule
3(e) Conflicts
(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN THE COMPANY
AND THE INVESTOR)
Schedule
3(g) Material
Changes (INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN THE
COMPANY AND THE INVESTOR)
Schedule
3(h) Litigation
(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN THE COMPANY
AND THE INVESTOR)
Schedule
3(l) Intellectual
Property(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN THE
COMPANY AND THE INVESTOR)
Schedule
3(n) Liens
(INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN THE COMPANY
AND THE INVESTOR)
Schedule
3(t) Certain
Transactions (INCLUDED IN SUBSCRIPTION AGREEMENT DATED AUGUST 12, 2005 BETWEEN
THE COMPANY AND THE INVESTOR)
