<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K
---------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Earliest Event Reported: February 6, 1997
HYPERDYNAMICS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 000-25496 82-0400335
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation or organization) Identification No.)
5444 Westheimer, Suite 2080
Houston, Texas 77056
(Address of principal executive offices, including zip code)
(713) 622-1893
(Registrant's telephone number, including area code)
Former name of Registrant: RAM-Z Enterprises, Inc.
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Item 1. Changes in Control of Registrant.
On February 6, 1997, as a result of the Divestiture Agreement (the
"Divestiture Agreement") described in Item 2 below, former shareholders of
Houston Creative Connections, Inc. ("HCCI") exchanged 2,102,000 shares of
common stock of the Company for all of the shares of common stock of HCCI that
the Company owned. The Company has canceled the shares of the common stock
received by the Company from the former HCCI shareholders. In connection with
the Divestiture Agreement former shareholders of MicroData Systems, Inc.
("MDSI") received an additional 700,000 shares of common stock of the Company
as an adjustment and correction of the valuation received by the former
shareholders of MDSI in connection with the Reorganization Agreement entered
into between the Company and MDSI in July, 1996 (the "MDSI Reorganization
Agreement"). As a result of the reduction in outstanding shares of common stock
of the Company and the corresponding increase in shares to the shareholders of
MDSI certain former shareholders of MDSI became control persons without the
payment of any consideration, other than as previously stated. In connection
with the issuance of the additional 700,000 shares, the former shareholders of
MDSI waived their rescission rights which they were entitled to pursuant to the
MDSI Reorganization Agreement. The former shareholders of MDSI are Kent Watts,
Mike Watts, and Willie Blair. To the extent that control was assumed as a
result of the Divestiture Agreement, it was assumed from Susanne L. Jackson,
David Jackson (husband of Susanne L. Jackson), Arthur Frank "Trey" Click III,
and Houston Creative Connection Management Incentive Plan, who were all former
shareholders of HCCI. As a result of the Divestiture Agreement Kent Watts now
directly owns 22% of the Company's shares of common stock and may be deemed to
be in control, and Gregory J. Micek now directly owns 11% of the Company's
shares of common stock and may be deemed to be in control. See, Item 2 below.
Item 2. Acquisition or Disposition of Assets.
On February 6, 1997, HyperDynamics Corporation, the Registrant
(formerly known as RAM-Z Enterprises, Inc.), a Delaware corporation, (the
"Company") (see Item 5 of this Form 8-K which reports the name change), through
its subsidiary, HyperDynamics Corporation, a Texas corporation (
"HyperDynamics"), divested its subsidiary HCCI. HyperDynamics acquired HCCI in
July 1996 and HCCI operated as a wholly owned subsidiary of HyperDynamics
pursuant to the terms of a share exchange and acquisition agreement called the
HCCI Reorganization Agreement (the "HCCI Reorganization Agreement").
HyperDynamics entered into an Agreement and Plan of Reorganization with the
Company in August 1996.
In February, 1997, the former shareholders of HCCI and the Company
(the "Parties") agreed that the original business objectives envisioned at the
time of the HCCI Reorganization Agreement had not been achieved, and that each
of the Parties have unique management styles. The Parties agreed that the
business objectives and goals of the Company and HCCI were not compatible and
that it would be in the best interests of the Parties to pursue their goals and
objectives independent of one another. The Parties further agreed that certain
other conditions as contemplated by the HCCI Reorganization Agreement had not
been satisfied as of that time.
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Accordingly, on February 7, 1997, the Parties entered into a
Divestiture Agreement (the "Divestiture Agreement") pursuant to which the
former shareholders of HCCI agreed to deliver 2,102,000 shares of the Company's
common stock to the Company, and the Company agreed to deliver 1,000 shares of
HCCI common stock to the former shareholders of HCCI. This represents a
complete unwinding of the consideration of the Parties under the HCCI
Reorganization Agreement. Two directors of the Company who were also former
shareholders of HCCI agreed to resign. They are Susanne L. Jackson and Arthur
Frank "Trey" Click III. The former shareholders of HCCI are: Susanne L.
Jackson, David Jackson (husband of Susanne L. Jackson), Arthur Frank "Trey"
Click III, and Houston Creative Connection Management Incentive Plan.
A significant portion of the Company's assets were divested in
connection with the Divestiture Agreement. The Company incorporates by
reference its prior Form 8-K, as amended, filed August 26, 1996, and Form
10-QSB filed November 14, 1996.
In January, 1997, the Board of Directors of the Company agreed with
the former shareholders of MDSI that in the event of a divestiture of HCCI that
the Company would issue to the former shareholders of MDSI 700,000 shares of
common stock of the Company. The Board agreed to issue the additional 700,000
shares as recognition of the need to adjust and correct the valuation received
by the former shareholders of MDSI in the Reorganization Agreement entered into
between the Company and MDSI in July, 1996 (the "MDSI Reorganization
Agreement"), which formed the basis for the original transaction between the
Company and MDSI and which resulted in MDSI becoming a wholly owned subsidiary
of the Company. In consideration for the Board of Directors' action, the
former shareholders of MDSI agreed to waive certain rescission rights which
were contained in the MDSI Reorganization Agreement. Consequently, as a result
of the divestiture of HCCI, the Company issued to the former shareholders of
MDSI 700,000 shares of common stock of the Company.
Item 5. Other Events.
The new name of the Company is HyperDynamics Corporation. The new
stock symbol on the OTCBB is "HYPD". The Company filed an amendment to its
Articles of Incorporation to change its name pursuant to a vote by the Board
and the Shareholders. The Amendment was filed as of January 21, 1997. the
former name of the Company was RAM-Z Enterprises, Inc. The former OTCBB symbol
was RAMS.
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Item 7. Financial Statements and Exhibits:
None.
Exhibits pursuant to Item 601 of Regulation S-B:
<TABLE>
<CAPTION>
Exhibit No.
<S> <C>
2.1 -- Divestiture Agreement
2.2 -- HCCI Reorganization Agreement
2.3 -- MDSI Reorganization Agreement
</TABLE>
4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HYPERDYNAMICS CORPORATION
Date: February 12, 1997 By: /s/ Gregory J. Micek
-----------------------------
Gregory J. Micek, President
5
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. DESCRIPTION
----------- -----------
<S> <C>
2.1 -- Divestiture Agreement
2.2 -- HCCI Reorganization Agreement
2.3 -- MDSI Reorganization Agreement
</TABLE>
<PAGE> 1
EXHIBIT 2.1
DIVESTITURE AGREEMENT
This Divestiture Agreement (the "Agreement") is entered into this 6th
day of February, 1997, by and among HYPERDYNAMICS CORPORATION, a Delaware
corporation (formerly Ram-Z Corporation) (the "Company"), HYPERDYNAMICS
CORPORATION, a Texas corporation ("Hyperdynamics"), HOUSTON CREATIVE
CONNECTIONS, INC., a Texas corporation ("HCCI"), and the former shareholders of
HCCI listed on the signature page hereto who collectively owned 100% of the
issued and outstanding equity securities of HCCI (the "Shareholders")
immediately prior to the Reorganization Agreement among the parties thereto
dated on or about July 15, 1996 (the "Reorganization Agreement"). The Company,
Hyperdynamics, HCCI, and the Shareholders are hereinafter collectively referred
to as the "Parties."
WHEREAS, pursuant to the terms of the Reorganization Agreement, the
Shareholders exchanged 1,000 shares of common stock of HCCI, which represents
100% of the equity ownership in HCCI for 2,102,000 shares of common stock of
the Company; and
WHEREAS, the shares of common stock of HCCI exchanged by the
Shareholders are presently owned and held of record by Hyperdynamics, a wholly
owned subsidiary of the Company; and
WHEREAS, the Parties agree that the original business objectives
envisioned at the time of the Reorganization Agreement by the Company and HCCI
have not been achieved; and
WHEREAS, the Parties acknowledge that they each have unique management
styles; and
WHEREAS, the Parties agree that the business objectives and goals of
the Company and HCCI are not compatible and that it would be in each of the
Parties best interests to pursue their goals and objectives independent of one
another; and
<PAGE> 2
WHEREAS, the Parties hereto agree that in addition to the matters
referenced above, certain conditions as contemplated by the Reorganization
Agreement have not been satisfied as of the date hereof which also supports the
decision of the Parties to effectuate the divestiture of HCCI.
NOW, THEREFORE, in consideration of the foregoing, and mutual promises
contained herein and other good and valuable consideration, the Parties hereto
agree as follows:
1. The Shareholders hereby agree to deliver to the Company their
stock certificates representing, in the aggregate, 2,102,000 shares of common
stock of the Company, duly endorsed for transfer, in exchange for the delivery
by the Company and Hyperdynamics to the Shareholders of stock certificates
representing all of the issued and outstanding shares of common stock of HCCI,
which represents 1,000 shares to the Shareholders. Notwithstanding anything to
the contrary herein, the Shareholders acknowledge that the 1,000 shares of HCCI
acquired by Hyperdynamics pursuant to the Reorganization Agreement remained
certificated in the name of and in the possession of the Shareholders and the
Shareholders acknowledge the retention and receipt of the 1,000 shares and the
same need not be delivered to the Shareholders pursuant to this Agreement.
2. In consideration for the shares of the Company exchanged by
them, Trey Click and Houston Creative Connection Management Incentive Plan each
hereby acknowledge and agree that the shares of HCCI retained and received by
the other Shareholders represent all of the shares to which Trey Click and
Houston Creative Connection Management Incentive Plan are entitled under this
Agreement.
3. Contemporaneous with the execution of this Agreement and the
exchange of common stock, Suzanne Jackson and Trey Click shall resign as
directors of the Company.
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4. The Company and HCCI agree that all intercompany charges
incurred up to the date hereof between the Company and HCCI will be offset
against each other so that no indebtedness will be outstanding from the Company
or Hyperdynamics to HCCI or from HCCI to the Company or Hyperdynamics.
5. The Company and Hyperdynamics represent and warrant that the
HCCI shares of common stock, when delivered by the Company and Hyperdynamics to
the Shareholders, constitute all of the issued and outstanding shares of HCCI
and are delivered free of any claim, lien, restriction or other encumbrance and
that immediately prior to such delivery to the Shareholders, Hyperdynamics is
the record and beneficial owner thereof. Except for the Reorganization
Agreement, the Company and Hyperdynamics represent and warrant that they have
not entered into any agreements or commitments affecting the capital stock,
assets, liabilities, operations, business or ownership of HCCI. The
Shareholders, jointly and severally, represent and warrant that the 2,102,000
shares of common stock of the Company delivered by the Shareholders to the
Company constitute all of the issued and outstanding shares of common stock of
the Company acquired by them pursuant to the Reorganization Agreement and are
delivered free of any claim, lien, restriction or other encumbrance arising by
or through them and represent that they are the record and beneficial owners
thereof. Except for the Reorganization Agreement, the Shareholders further
represent and warrant that they have not entered into any agreements or
commitments affecting the capital stock, assets, liabilities, operations,
business or ownership of the Company or Hyperdynamics.
6. This Agreement represents the entire agreement between the
Parties with respect to the termination of the Reorganization Agreement and the
divestiture of HCCI. Upon the execution hereof and the delivery of the stock
certificates contemplated hereby, neither HCCI and the
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Shareholders on the one hand and the Company and Hyperdynamics on the other,
will owe any duty, obligation, commitment or liability to the other with
respect to the Reorganization Agreement and the divestiture contemplated
hereby, and no other agreements, commitments, or obligations exist between the
Parties requiring future performance with respect to any matter whatsoever
except as provided herein. Notwithstanding the foregoing, subsequent to the
execution of this Agreement and the exchange of the securities contemplated
hereby, the Parties agree to cooperate with each other and to execute any and
all documents which may be required, consistent with the terms and conditions
hereof, in connection with the separation of the Company and HCCI.
7. HCCI and the Shareholders on the one hand, and the Company and
Hyperdynamics on the other, in exchange for the consideration and mutual
promises herein provided, and on behalf of any person claiming by or through
such parties, do hereby remise, waive, release, acquit and forever discharge
each other and their respective officers, directors, employees, agents,
successors and assigns from any and all claims, causes of action and demands of
any nature whatsoever, whether known or unknown, accrued or unaccrued,
contingent or otherwise, existing from the beginning of time through the date
hereof, including without limitation, counterclaims, demands, damages, debts,
agreements, covenants, suits, contracts, obligations, liabilities, accounts,
offsets, rights, actions and causes of action of any nature whatsoever which
have occurred in whole or in part or which were initiated, arose or relate to
any time or period up to and through the date hereof except for:
(i) any claims by either party for breach of this Agreement; or
(ii) any claims of the Shareholders of HCCI for indemnification
from the Company or Hyperdynamics pursuant to the following
paragraph.
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To the same extent as any other person who has served as an officer
and director of the Company, Hyperdynamics and the Company agree to indemnify
and hold the Shareholders harmless to the fullest extent permitted by law from
any claim or claims which may be asserted against them by any person, entity,
shareholder or governmental agency or authority which in any way relates to
their service as an officer, director, employee or agent of the Company or
Hyperdynamics.
8. The Company and Hyperdynamics covenant and agree that
following the completion of the divestiture of HCCI that neither they nor their
employees, officers, directors, agents, or affiliates will solicit the business
of any customers, accounts or prospects of HCCI existing as of the date of the
divestiture of HCCI for purposes of providing services which are the same or
similar to those provided by HCCI, provided however, that nothing contained
herein shall preclude the Company from providing non-personnel out-sourcing
services to the Houston Chronicle.
9. HCCI and the Shareholders on one hand, and the Company and
Hyperdynamics on the other, agree that they had access to or received
confidential information regarding the business and operations of the other
during the period of their affiliation. Each such party agrees to treat all
such information as the confidential and proprietary information of the other
and to not disclose or use any of such information without the prior written
consent of the other.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HYPERDYNAMICS CORPORATION, a Delaware
corporation
By: /s/ GREGORY J. MICEK
-----------------------------
Gregory J. Micek, President
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HYPERDYNAMICS CORPORATION, a Texas
corporation
By: /s/ GREGORY J. MICEK
-----------------------------
Gregory J. Micek, President
HOUSTON CREATIVE CONNECTIONS, INC.
By: /s/ SUZANNE JACKSON
-----------------------------
Suzanne Jackson, President
HCCI SHAREHOLDERS:
/s/ SUZANNE JACKSON
--------------------------------
Suzanne Jackson, Shareholder
/s/ DAVID JACKSON
--------------------------------
David Jackson, Shareholder
/s/ TREY CLICK
--------------------------------
Trey Click, Shareholder
HOUSTON CREATIVE CONNECTION
INCENTIVE PLAN
By: /s/ SUZANNE JACKSON
-----------------------------
Suzanne Jackson,
Attorney in Fact
6
<PAGE> 1
EXHIBIT 2.2
REORGANIZATION AGREEMENT
This Reorganization Agreement is made and entered into this 19th day of
July, 1996 between and among HyperDynamics Corporation, a Texas Corporation
whose principal executive office is located at 5444 Westheimer, Suite 2080,
Houston, Texas 77056 (referred to herein as "HyperDynamics") Houston Creative
Connections, Inc., a Texas Corporation whose principal executive office is
located at 701 North Post Oak, Suite 675, Houston, Texas 77024 (referred to
herein as "HCCI") and the persons identified in Exhibit A attached hereto, who
are the beneficial owners of 100% of the issued and outstanding equity
securities of HCCI (the "Shareholders").
WHEREAS, the Shareholders own, and have the unrestricted right to sell,
transfer and convey, one hundred percent (100%) of the issued and outstanding
capital stock of HCCI, and
WHEREAS, HyperDynamics wishes to acquire one hundred percent (100%) of the
issued and outstanding capital stock of HCCI, in exchange for authorized but
unissued shares of the Common Stock of HyperDynamics, and
WHEREAS, the Shareholders have agreed to contribute one hundred percent
(100%) of the issued and outstanding capital stock of HCCI to HyperDynamics in
exchange for authorized but unissued Common Stock of HyperDynamics, and
WHEREAS, upon the closing of this Reorganization Agreement and certain
other business combination transactions referred to herein, it is anticipated
that HyperDynamics will then enter into a similar Reorganization Agreement with
a public corporation selected by HyperDynamics (the "Public Company"), in a
transaction which provides that the Shareholders will receive a total of
2,102,000 shares of the Public Company's restricted common stock ("Restricted
Stock") in exchange for the shares of HyperDynamics issuable to the
Shareholders pursuant to this Reorganization Agreement, and
WHEREAS, HyperDynamics, HCCI and the Shareholders wish to formalize the
above-mentioned agreement and thereafter accomplish the transactions
contemplated hereby on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto have agreed and by these
presents do hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF HCCI AND THE SHAREHOLDERS. HCCI and
the Shareholders hereby jointly and severally make the following express
representations and warranties to HyperDynamics:
(a) HCCI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and has the corporate
power to own its property and carry on its business in the State of
Texas. Certified copies of HCCI's Certificate of Incorporation and
By-Laws have heretofore been furnished to HyperDynamics by HCCI and/or
the Shareholders, and all such copies are true, correct and complete
copies of the original Certificate of Incorporation and By-Laws,
including all amendments thereto.
(b) HCCI has the corporate authority to issue a total of 100,000 shares of
no par value Common Stock, of which 1,000 shares have been validly
issued, are now outstanding and
Final Reorganization Agreement
Page 1
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are held of record by the Shareholders identified in Exhibit A, attached
hereto and incorporated herein by this reference.
(c) The Shareholders identified in Exhibit A have full power and authority
to exchange all shares of HCCI's Common Stock which are held by them upon
the terms and conditions provided for in this Agreement, and said shares
will have been duly and validly issued and be free and clear of any lien
or other encumbrance on the Closing Date specified herein.
(d) The unaudited financial statements of HCCI for the years ended December
31, 1994 and 1995 and the three-month periods ended June 30, 1995 and
1996, which are attached hereto as Exhibit B, constitute substantially
true and correct statements of the financial condition of HCCI and of
HCCI's assets and liabilities as of each such date. Since June 30,
1996, unless described in the notes to the financial statements, HCCI
has not:
(1) issued any additional shares of its capital stock, or any stock
purchase rights, to any person other than the persons listed in
Exhibit A,
(2) paid or declared any dividends or distributions of capital,
surplus, or profits with respect to any of its issued and
outstanding shares of capital stock,
(3) paid or agreed to pay any consideration in redemption of any of
its issued and outstanding shares of capital stock, or
(4) entered into any other transaction or agreement which would, or
might, materially impair the shareholder's equity of HCCI as
reflected in such financial statements.
(e) Since June 30, 1996, HCCI has not engaged in any material transactions
other than transactions in the normal course of the operation of its
business, which would, or might, materially impair the shareholder's
equity of HCCI as reflected in the financial statements.
(f) HCCI is not involved in any pending or threatened litigation which would,
or might, materially affect its financial condition and which has not
been:
(1) provided for in the financial statements, or
(2) disclosed to HyperDynamics in writing.
(g) HCCI has good and marketable title to all of the property and assets
shown in its balance sheet free and clear of any and all liens,
encumbrances or restrictions, except for:
(1) the liens, encumbrances and restrictions which are set
forth in its balance sheet and the notes thereto,
(2) taxes and assessments which may become due and payable
after the date of this Agreement, and
(3) easements or other minor restrictions with respect to its
property which do not materially affect the present use
of such property.
(h) HCCI presently owns 100% of an unincorporated subsidiary doing
business as "The Agency." It is expressly agreed that the
Reorganization contemplated by this agreement will include all
of HCCI's right, title and interest in and to The Agency and that
from and after the Closing Date specified herein The Agency will
be a wholly-owned unincorporated subsidiary of HyperDynamics.
Final Reorganization Agreement
Page 2
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(i) There are no unpaid assessments or proposed assessments of Federal
income taxes pending against HCCI. All liabilities for Federal and
State income or franchise taxes, as shown on the tax returns filed, or
to be filed, by HCCI, have been paid or the liability therefor has been
provided for in the attached balance sheet and all Federal and State
income or franchise taxes for periods subsequent to the periods covered
by said returns likewise have been paid or adequately accrued.
(j) The Shareholders are acquiring the Common Stock of HyperDynamics solely
for their own account, for investment, and not with a view to any
subsequent "distribution" thereof within the meaning of that term as
defined in the Securities Act of 1933, as amended (said Act and rules and
regulations promulgated thereunder being hereinafter referred to as the
"Act"). The Shareholders understand that the Common Stock of
HyperDynamics has not been registered under the Act or Securities laws of
any State ("State Act") by reason of the specific exemptions therefrom,
which exemptions depend in part upon the Shareholders subjective
investment intent as expressed herein. In furtherance of the foregoing,
each Shareholder shall be required to execute and deliver to
HyperDynamics an Investment Letter, in the form attached hereto as
Exhibit C, as a condition precedent to the issuance of a new share
certificate for the Common Stock of HyperDynamics that will be issued to
him.
(k) The Shareholders hereby jointly acknowledge that they are either
(1) "Accredited Investors" as such term is defined in Regulation D
promulgated under the Act, or
(2) That they have such knowledge and experience in financial and
business matters that they are capable of evaluating the merits and
risks of the proposed exchange of HCCI's stock for Common Stock of
HyperDynamics, and
(3) That they are able to bear the economic risks of the investment
and are able to protect their own interests in an investment of
this nature.
HCCI and the Shareholders further represent and warrant that all of the
representations and warranties set forth above are true as of the date of this
Agreement, shall be true at the Closing Date and shall survive the closing for
a period of six (6) months from the Closing Date, except as to the warranties
and representations set forth in subsection (f) hereof which shall survive for
a period of three (3) years from the Closing Date.
2. REPRESENTATIONS AND WARRANTIES OF HYPERDYNAMICS. HyperDynamics
hereby makes the following express representations and warranties to HCCI and
the Shareholders:
(a) HyperDynamics is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and has the corporate
power to own its properties and carry on its business as now being
conducted. Certified copies of HyperDynamics' Certificate of
Incorporation and By-Laws have heretofore been furnished to HCCI and/or
the Shareholders by HyperDynamics, and all such copies are true, correct
and complete copies of the original Certificate of Incorporation and
By-Laws including all amendments thereto.
(b) HyperDynamics has the corporate authority to issue a total of
100,000,000 shares of $0.01 par value Common Stock, of which
shares are presently issued and outstanding and 10,000,000 shares
of $0.01 par value Preferred Stock, of which no shares are presently
Final Reorganization Agreement
Page 3
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issued and outstanding. Each person who is the record owner of 5% or
more of such shares is identified in Exhibit D to this Agreement.
(c) Prior to the Closing Date specified herein, HyperDynamics will have
received fully paid subscriptions for a minimum of 260,000 additional
shares of its Common Stock which are presently being offered to
qualified prospective investors at a price of $0.50 per share. A true
and complete copy of the offering documentation relating to such private
placement, including all exhibits thereto, is attached hereto as Exhibit
E.
(d) Each person who subscribes to purchase any of the shares of Common Stock
specified in Section 2(c) shall, as a condition of sale, be required to
assent to all of the terms and conditions of this Agreement.
(e) The unaudited June 30, 1996, Balance Sheet of HyperDynamics which is
attached hereto as Exhibit F, constitutes a substantially true and
correct statement of the financial condition of HyperDynamics and
HyperDynamics' assets, liabilities and income as of such date. Since
the date of such Balance Sheet, HyperDynamics has not
(1) issued any additional shares of its Common Stock, or any options
to acquire such stock, to any person,
(2) paid or declared any dividends or distributions of capital,
surplus, or profits with respect to any of its issued and
outstanding shares of Common Stock,
(3) paid or agreed to pay any consideration in redemption of any of
its issued and outstanding shares of Common Stock, or
(4) entered into any other transaction or agreement which would, or
might, materially impair the shareholder's equity of
HyperDynamics as reflected in such Balance Sheet.
(f) HyperDynamics has the corporate power and authority to execute and
perform all of its duties and obligations under the terms of this
Agreement and to issue and deliver to the Shareholders the shares of
Common Stock that are required to be issued and delivered under the
terms of this Agreement.
(g) The execution and delivery of this Agreement, and the issuance of Common
Stock required to be issued hereunder, will have been duly authorized by
all necessary corporate action and neither the execution nor delivery of
this Agreement nor the issuance of Common Stock nor the performance,
observance or compliance with the terms and provisions of this Agreement
will violate any provision of law, any order of any court or other
governmental agency, the Certificate of Incorporation or By-Law of
HyperDynamics or any indenture, agreement or other instrument to which
HyperDynamics is a party, or by which it is bound or by which any of its
property is bound.
(h) HyperDynamics is not involved in any pending or threatened litigation
which would, or might, materially affect its financial condition and
which has not been
(1) provided for in its financial statements, or
(2) disclosed to HCCI and the Shareholders in writing.
(i) There are no unpaid assessments or proposed assessments of Federal
income taxes pending against HyperDynamics. All liabilities for Federal
and State income or franchise taxes, as shown on the tax returns filed,
or to be filed, by HyperDynamics, have been paid or the
Final Reorganization Agreement
Page 4
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liability therefor has been provided for in the attached Balance Sheet
and all Federal and State income or franchise taxes for periods
subsequent to the periods covered by said returns likewise have been
paid or adequately accrued.
(j) The shares of Common Stock which will be delivered to the Shareholders
pursuant to the terms of this Agreement will, on delivery in accordance
with the terms hereof, be duly authorized, validly issued and fully paid
and nonassessable.
(k) During the period between the closing date of this Agreement and the
expiration of the option period specified in Section 9(b), HyperDynamics
shall grant the Shareholders full power and authority to continue to
manage and operate the day-to-day business of HCCI and The Agency in the
same manner as those companies are presently being managed and operated
subject to the following limitations:
(1) The Board of Directors HyperDynamics shall have the authority to
approve all capital expenditures and other investments by HCCI
and The Agency which exceed $2,500 per transaction or $5,000 per
month;
(2) The Board of Directors HyperDynamics shall have the authority to
approve all matters relating to executive compensation and fringe
benefits, provided, however, that the base salaries payable to
the Shareholders shall not be less than 1995 levels;
(3) HCCI and The Agency shall implement all financial accounting and
reporting policies and procedures established by HyperDynamics
and shall at all times subject its financial accounting and
reporting functions to the direct supervision and control of the
chief accounting officer of HyperDynamics; and
(4) HCCI and The Agency shall not expand their activities into new or
different lines of business without the prior approval of the
Board of Directors of HyperDynamics
(l) During the period between the closing date of this Agreement and the
expiration of the option period specified in Section 9(b), HyperDynamics
shall not, without the prior consent of the Shareholders, contribute
funds to or withdraw funds from HCCI, it being intended that 100% of the
cash flow and earnings of HCCI shall be and remain available for the
expansion of the business of HCCI.
HyperDynamics further represents and warrants that all of the representations
and warranties set forth above are true as of the date of this Agreement, shall
be true at the Closing Date and shall survive the closing for a period of six
(6) months from the Closing Date, except as to the warranties and
representations set forth in subsections (k) and (l) hereof which shall survive
until and the expiration of the option period specified in paragraph 9(b).
3. CONDITIONS TO THE OBLIGATIONS OF HYPERDYNAMICS. The obligations of
HyperDynamics hereunder shall be subject to the following conditions:
(a) HyperDynamics shall not have discovered any material error, misstatement
or omission in any of the representations and warranties made by HCCI or
the Shareholders herein and all the terms and conditions of this
Agreement to be performed and complied with have been performed and
complied with.
(b) There shall have been no substantial adverse changes in the financial
condition, business or operations of HCCI from June 30, 1996, until the
Closing Date, except for changes resulting from operations in the usual
and ordinary course of its business, and between such dates no business
and assets of HCCI shall have been materially adversely affected as the
Final Reorganization Agreement
Page 5
<PAGE> 6
result of any fire, explosion, earthquake, flood, accident, strike,
lockout, combination of the workmen, taking over of any such assets by
any governmental authorities, riot, activities of armed forces, or Acts
of God or of the public enemies.
(c) There shall have been no substantial adverse changes in the financial
condition, business or operations of HyperDynamics, except for changes
resulting from those operations in the usual ordinary course of the
business, and no business and assets of HyperDynamics shall have been
materially adversely affected as the result of any fire, explosion,
earthquake, flood, accident, strike, lockout, combination of the
workmen, taking over of any such assets by any governmental authorities,
riot, activities of armed forces, or Acts of God or of the public
enemies.
(d) HyperDynamics shall have received the opinion of legal counsel to the
effect that
(1) HCCI is a corporation duly organized, validly existing and in good
standing under the laws of Texas and has the power and authority
to own its properties and to carry on its business in the State
of Texas as of the Closing Date,
(2) HCCI's outstanding Common Stock is validly issued, fully paid and
nonassessable, and
(3) This Agreement has been duly executed and delivered by HCCI and
the Shareholders and constitutes a legal, valid and binding
obligation of the Shareholders enforceable in accordance with its
terms.
4. CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS. The obligations
of the Shareholders hereunder are subject to the following conditions:
(a) The Shareholders shall not have discovered any material error or
misstatement in any of the representations and warranties made by
HyperDynamics herein and all the terms and conditions of this Agreement
to be performed and complied with by HyperDynamics have been performed
and complied with.
(b) There shall have been no substantial adverse changes in the financial
condition, business or operations of HyperDynamics, except for changes
resulting from those operations in the usual ordinary course of the
business, and no business and assets of HyperDynamics shall have been
materially adversely affected as the result of any fire, explosion,
earthquake, flood, accident, strike, lockout, combination of the
workmen, taking over of any such assets by any governmental authorities,
riot, activities of armed forces, or Acts of God or of the public
enemies.
(c) The Shareholders shall have received the opinion of John L. Petersen,
legal counsel for HyperDynamics, to the effect that
(1) HyperDynamics is a corporation duly organized and validly
existing under the laws of the State of Texas and has the power
to own and operate its properties wherever the same shall be
located as of the Closing Date;
(2) the execution, delivery and performance of this Agreement by
HyperDynamics has been duly authorized by all necessary
corporate action and constitutes a legal, valid and binding
obligation of HyperDynamics enforceable in accordance with its
terms; and
Final Reorganization Agreement
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<PAGE> 7
(3) the Common Stock which is to be delivered to The Shareholders
pursuant to the terms of this Agreement has been validly issued,
is fully paid and nonassessable.
5. CLOSING DATE. The final closing of this Agreement shall take
place in Houston, Texas on the 19th day of July, 1996 at the hour of 11:00 a.m.,
local time, or at such other reasonable time and place as the parties hereto
shall agree upon.
6. EXCHANGE OF SECURITIES.
(a) Subject to the terms and conditions set forth herein, and at the time of
the closing referred to in Section 5 hereof HyperDynamics will issue and
deliver, or cause to be issued and delivered to the Shareholders
identified in Exhibit A certificates evidencing the ownership of
2,102,000 shares of the authorized but unissued shares of HyperDynamics'
$0.01 par value Common Stock and concurrently therewith the Shareholders
identified in Exhibit A shall directly or through their agent deliver or
cause to be delivered to HyperDynamics, certificates evidencing the
ownership of 1,000 shares of the issued and outstanding capital stock of
HCCI, duly endorsed to HyperDynamics.
(b) The number of shares provided for in Section 6(a) is based on the
assumption that HCCI will generate a minimum of $5 million in revenues
and The Agency will generate an additional $1.6 million in gross revenue
during the 12 month period ending on June 30, 1997. In the event that
HCCI generates less than $4.5 million in gross revenue during such
period, then on the FIRST anniversary of the date of this agreement, the
Shareholders shall surrender to HyperDynamics for cancellation 1 share
of stock for each $100 of revenue shortfall experienced by HCCI during
the 12 month period ending on June 30, 1997. Similarly, in the event
that The Agency generates less than $1.4 million in gross revenue during
the 12 month period ending on June 30, 1997, then on the first
anniversary of the date of this agreement, the Shareholders shall
surrender to HyperDynamics for cancellation 1 share of stock for each $2
of revenue shortfall experienced by the Agency during the 12 month
period ending on June 30, 1997, subject to an overall maximum of 200,000
shares. All such surrenders shall relate back to the date of this
Agreement and shall be treated in all respects as an adjustment in the
acquisition price paid for HCCI and The Agency by HyperDynamics.
7. ACTIONS AT THE CLOSING. At the final closing of this Agreement,
HyperDynamics and the Shareholders will each deliver, or cause to be delivered
to the other, the shares of stock to be exchanged in accordance with Section 6
of this Agreement and each party shall pay any and all Federal and State taxes
required to be paid in connection with the issuance and the delivery of their
own securities. All stock certificates shall be in the name of the party to
which the same are deliverable. In addition to the above-mentioned exchange of
certificates, the following transactions will take place at the final closing.
HYPERDYNAMICS WILL DELIVER TO THE SHAREHOLDERS AND HCCI:
(a) Duly certified copies of corporate resolutions and other corporate
proceedings taken by HyperDynamics to authorize the execution, delivery
and performance of this Agreement;
(b) The opinion of legal counsel provided for in Section 4(c) hereof;
(c) A certificate executed by a principal officer of HyperDynamics attesting
to the fact that all of the foregoing representations and warranties of
HyperDynamics are true and correct as of the Closing Date and that all
of the conditions to the obligations of the Shareholders which are to be
performed by HyperDynamics have been performed as of the Closing Date;
and
Final Reorganization Agreement
Page 7
<PAGE> 8
(d) A certificate of corporate good standing for HyperDynamics from the
State of Texas which shall be dated no more than 60 days prior to the
Closing Date.
THE SHAREHOLDERS AND HCCI WILL DELIVER TO HYPERDYNAMICS:
(a) The opinion of legal counsel provided for in Section 3(e) hereof;
(b) A certificate of corporate good standing for HCCI from the Secretary of
State of the State of Texas which shall be dated no more than 60 days
prior to the Closing Date; and
(c) A certificate by a principal officer of HCCI that each of the
representations and warranties of the Shareholders and HCCI are true and
correct as of the Closing Date and that all of the conditions to the
obligations of HyperDynamics which are to be performed by HCCI and the
Shareholders have been performed as of the Closing Date.
8. CONDUCT OF BUSINESS. Between the date hereof and the Closing Date,
HCCI shall conduct its business in the same manner in which it has heretofore
been conducted and the Shareholders will not permit HCCI to (1) enter into any
contract, other than in the ordinary course of business, or (2) declare or make
any distribution in the nature of a dividend or return of capital to the
Shareholders of HCCI, without first obtaining the written consent of
HyperDynamics.
9. FUTURE REGISTRATION. The Shareholders understand that because the
Common Stock has not been registered under the Act or any State Act, they must
hold the Common Stock indefinitely, and cannot dispose of any or all of the
Common Stock unless such Common Stock is subsequently registered under the Act
and any applicable State Act, or exemptions from registration are available.
(a) The Shareholders acknowledge and understand that they have no
independent right to require HyperDynamics to register the shares of
Common Stock. The Shareholders further understand that HyperDynamics
may, as a condition to the transfer of any of Common Stock, require that
the request for transfer by a Shareholder be accompanied by an opinion
of counsel, in form and substance satisfactory to HyperDynamics,
provided at such Shareholder's expense, to the effect that the proposed
transfer does not result in violation of the Act or any applicable State
Act, unless such transfer is covered by an effective registration
statement under the Act and is in compliance with all applicable State
Acts.
(b) Notwithstanding the generality of the foregoing, HyperDynamics agrees
that on or before June 30, 1997, it will either (i) cause the Public
Company to file a registration statement under the Securities Act of
1933 so as to allow the unrestricted resale of up to 500,000 shares of
the Common Stock issuable to the Shareholders pursuant to the terms of
this agreement, or (ii) cause the Public Company to arrange for the
private resale of such shares on terms and conditions customary in
similar transactions. In the event that the Public Company fails to
obtain an order of effectiveness for such registration statement at a
time when the stock price is at least $3.00 per share, or is unable to
arrange for a private resale of such shares at a price of not less than
$3.00 per share, then the Shareholders will have the option, for a
period of 60 days, to surrender all shares of Public Company stock
issuable to them in connection with the transactions contemplated hereby
to the Public Company in exchange for 100% of the issued and outstanding
common stock of HCCI and the Agency.
(c) The Public Company will pay all costs and expenses relating to the
registration, offer, and sale of the Securities, other than the fees of
underwriters or brokers who sell shares on behalf of the Shareholders.
Notwithstanding the foregoing, the manner and conduct of the
registration, including the contents of the registration statement, will
be entirely in the
Final Reorganization Agreement
Page 8
<PAGE> 9
control and at the discretion of the Public Company. The Public Company
will file such post-effective amendments and supplements as may be
necessary to maintain the currency of the registration statement during
the period of its use. In addition, if the Shareholders are advised by
their counsel that the registration statement, in the opinion of such
counsel, is deficient in any material respect, the Public Company will
use its best efforts to cause the registration statement to be amended
to eliminate the concerns raised. The Public Company will furnish to
the Shareholders the number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Act,
and such other documents as they may reasonably request in order to
facilitate the disposition of Common Stock owned by them.
10. TRANSFERABILITY. All shares of Common Stock which are issued to the
Shareholders pursuant to the terms of this Agreement shall be restricted
securities within the meaning of Regulation D of the Act. HyperDynamics shall
issue stop transfer instructions to the transfer agent for its Common Stock
with respect to the Stock and shall place the following legend on the
certificates representing such stock:
"The shares represented by this certificate have been acquired pursuant
to a transaction effected in reliance upon an exemption under the
Securities Act of 1933, as amended (the "Act"), and have not been the
subject to a Registration Statement under the Act or any state
securities act. The securities may not be sold or otherwise transferred
in the absence of such registration or applicable exemption therefrom
under the Act or any applicable state securities act."
11. ACCESS TO INFORMATION. Concurrently herewith, HyperDynamics has
delivered to the Shareholders correct and complete copies of all documents
and records requested by the Shareholders. In addition, the Shareholders have
had the opportunity to ask questions of, and receive answers from, officers and
directors of HyperDynamics, and persons acting on its behalf concerning the
terms and conditions of the Agreement, and has received sufficient information
relating to HyperDynamics to enable them to make an informed decision with
respect to the acquisition of the Common Stock.
12. NO SOLICITATION. At no time were the Shareholders presented with or
solicited by any leaflet, public promotion meeting, circular, newspaper or
magazine article, radio or television advertisement, or any other form of
general advertising in connection with its acquisition of the Common Stock.
13. EXPENSES. The Shareholders, HCCI and HyperDynamics shall each pay
their respective expenses incident to this Agreement and the transactions
contemplated hereby, including all fees of their counsel and accountants,
whether or not such transactions shall be consummated; provided that HCCI may
pay the reasonable fees and expenses of the Shareholders counsel and its
accountants in connection with this Agreement, the proposed transactions
contemplated hereby, as well as travel and lodging expenses of its officers
related to the negotiation of this Agreement, up to a maximum of $10,000. The
Shareholders shall pay all other fees and expenses incurred by them or by HCCI
by reason of this Agreement and the proposed transactions contemplated hereby.
14. FINDERS. The Shareholders and HCCI shall indemnify and hold
HyperDynamics harmless against and with respect to all claims or brokerage or
other commissions relative to this Agreement or the transactions contemplated
hereby, based on any agreements, arrangements, or understandings claimed to
have been made by the Shareholders or HCCI with any third party. HyperDynamics
shall indemnify and hold the Shareholders and HCCI harmless against and with
respect to all claims for brokerage or other commissions relative to this
Agreement or the
Final Reorganization Agreement
Page 9
<PAGE> 10
transactions contemplated hereby, based in any agreements, arrangements, or
understandings claimed to have been made by HyperDynamics with any third party.
Each party to this Agreement represents and warrants to each other party that
it has not dealt with and does not know of any person, firm or corporation
asserting a brokerage, finder's or similar claim in connection with the making
or negotiation of this Agreement or the transactions contemplated hereby.
15. ATTORNEY'S FEES. In the event of any litigation among the parties
related to this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and costs to be fixed by the Court, said fees to include appeal
and collection of Judgment.
16. MISCELLANEOUS.
(a) This Agreement shall be controlled, construed and enforced in accordance
with the laws of the State of Texas.
(b) This Agreement shall not be assignable by either party without prior
written consent of the other.
(c) All paragraph headings herein are inserted for convenience only. This
Agreement may be executed in several counterparts, each of which shall
be deemed an original, which together shall constitute one and the same
instrument.
(d) This Agreement sets forth the entire understanding between the parties,
there being no terms, conditions, warranties or representations other
than those contained herein, and no amendments hereto shall be valid
unless made in writing and signed by the parties hereto.
(e) This Agreement shall be binding upon and shall inure to the benefit of
the heirs, executors, administrators and assigns of the Shareholders and
HCCI and upon the successors and assigns of HyperDynamics.
(f) All notices, requests, instructions, or other documents to be given
hereunder shall be in writing and sent by registered mail:
IF TO THE SHAREHOLDERS OR HCCI:
Houston Creative Connections, Inc.
701 North Post Oak, Suite 675
Houston, Texas 77024
IF TO HYPERDYNAMICS: WITH COPIES TO:
HyperDynamics Corporation John L. Petersen
5444 Westheimer, Suite 2080 7700 Oxfordshire Drive
Houston, Texas 77056 Spring, Texas 77379
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
HYPERDYNAMICS CORPORATION
By: /s/ Not legible
-----------------------
President
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HOUSTON CREATIVE SHAREHOLDERS IDENTIFIED IN
CONNECTIONS, INC. EXHIBIT A, ATTACHED HERETO.
By: /s/ SUSANNE JACKSON By:
------------------------------- -----------------------
President Attorney-in-fact
Attest: /s/ ARTHUR CLICK, III
----------------------------
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EXHIBIT A
STOCKHOLDERS OF
HOUSTON CREATIVE CONNECTIONS, INC.
NAME AND ADDRESS HCCI HYPERDYNAMICS
OF STOCKHOLDER SHARES SHARES
OWNED ISSUABLE
Susanne and David Jackson
Husband and Wife
4505 Brockwood
Houston, Texas 77092 1,000 1,600,000
Trey Click
701 North Post Oak, Suite 675
Houston, Texas 77024 251,000
Houston Creative Connection Management Incentive Plan
701 North Post Oak, Suite 675
Houston, Texas 77024 251,000
Final Reorganization Agreement
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<PAGE> 1
REORGANIZATION AGREEMENT
This Reorganization Agreement is made and entered into this 19th day
of July, 1996 between and among HyperDynamics Corporation, a Texas Corporation
whose principal executive office is located at 5444 Westheimer, Suite 2080,
Houston, Texas 77056 (referred to herein as "HyperDynamics") MicroData Systems,
Inc., a Texas Corporation whose principal executive office is located at 2656
South Loop West, Suite 103, Houston, Texas 77054 (referred to herein as "MDSI")
and the persons identified in Exhibit A attached hereto, who are the beneficial
owners of 100% of the issued and outstanding equity securities of MDSI (the
"Shareholders").
WHEREAS, the Shareholders own, and have the unrestricted right to
sell, transfer and convey, one hundred percent (100%) of the issued and
outstanding capital stock of MDSI, and
WHEREAS, HyperDynamics wishes to acquire one hundred percent (100%) of
the issued and outstanding capital stock of MDSI, in exchange for authorized
but unissued shares of the Common Stock of HyperDynamics, and
WHEREAS, the Shareholders have agreed to contribute one hundred
percent (100%) of the issued and outstanding capital stock of MDSI to
HyperDynamics in exchange for authorized but unissued Common Stock of
HyperDynamics, and
WHEREAS, upon the closing of this Reorganization Agreement and certain
other business combination transactions referred to herein, it is anticipated
that HyperDynamics will then enter into a similar Reorganization Agreement with
a public corporation selected by HyperDynamics (the "Public Company"), in a
transaction which provides that the Shareholders will receive a total of
604,000 shares of the Public Company's restricted common stock ("Restricted
Stock") in exchange for the shares of HyperDynamics issuable to the
Shareholders pursuant to this Reorganization Agreement, and
WHEREAS, HyperDynamics, MDSI and the Shareholders wish to formalize
the above-mentioned agreement and thereafter accomplish the transactions
contemplated hereby on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto have agreed and by these
presents do hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF MDSI AND THE SHAREHOLDERS.
MDSI and the Shareholders hereby jointly and severally make the following
express representations and warranties to HyperDynamics:
(a) MDSI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and has the corporate
power to own its property and carry on its business in the State of
Texas. Certified copies of MDSI's Certificate of Incorporation and
By-Laws have heretofore been furnished to HyperDynamics by MDSI and/or
the Shareholders, and all such copies are true, correct and complete
copies of the original Certificate of Incorporation and By-Laws,
including all amendments thereto.
(b) MDSI has the corporate authority to issue a total of _________ shares
of no par value Common Stock, of which _________ shares have been
validly issued, are now outstanding
Final Reorganization Agreement
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<PAGE> 2
and are held of record by the Shareholders identified in Exhibit A,
attached hereto and incorporated herein by this reference.
(c) The Shareholders identified in Exhibit A have full power and authority
to exchange all shares of MDSI's Common Stock which are held by them
upon the terms and conditions provided for in this Agreement, and said
shares will have been duly and validly issued and be free and clear of
any lien or other encumbrance on the Closing Date specified herein.
(d) The unaudited financial statements of MDSI for the years ended
December 31, 1994 and 1995 and the six month period ended 1996, which
are attached hereto as Exhibit B, constitute substantially true and
correct statements of the financial condition of MDSI and of MDSI's
assets and liabilities as of each such date. Since June 30, 1996,
unless described in the notes to the financial statements, MDSI has
not:
(1) issued any additional shares of its capital stock, or any
stock purchase rights, to any person other than the persons
listed in Exhibit A,
(2) paid or declared any dividends or distributions of capital,
surplus, or profits with respect to any of its issued and
outstanding shares of capital stock,
(3) paid or agreed to pay any consideration in redemption of any
of its issued and outstanding shares of capital stock, or
(4) entered into any other transaction or agreement which would,
or might, materially impair the shareholder's equity of MDSI
as reflected in such financial statements.
(e) Since June 30, 1996, MDSI has not engaged in any material transactions
other than transactions in the normal course of the operation of its
business, which would, or might, materially impair the shareholder's
equity of MDSI as reflected in the financial statements.
(f) MDSI is not involved in any pending or threatened litigation which
would, or might, materially affect its financial condition and which
has not been:
(1) provided for in the financial statements, or
(2) disclosed to HyperDynamics in writing.
(g) MDSI has good and marketable title to all of the property and assets
shown in its balance sheet free and clear of any and all liens,
encumbrances or restrictions, except for:
(1) the liens, encumbrances and restrictions which are set forth
in its balance sheet and the notes thereto,
(2) taxes and assessments which may become due and payable after
the date of this Agreement, and
(3) easements or other minor restrictions with respect to its
property which do not materially affect the present use of
such property.
(h) There are no unpaid assessments or proposed assessments of Federal
income taxes pending against MDSI. All liabilities for Federal and
State income or franchise taxes, as shown on the tax returns filed, or
to be filed, by MDSI, have been paid or the liability therefor has
been provided for in the attached balance sheet and all Federal and
State income or
Final Reorganization Agreement
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<PAGE> 3
franchise taxes for periods subsequent to the periods covered by said
returns likewise have been paid or adequately accrued.
(i) The Shareholders are acquiring the Common Stock of HyperDynamics
solely for their own account, for investment, and not with a view to
any subsequent "distribution" thereof within the meaning of that term
as defined in the Securities Act of 1933, as amended (said Act and
rules and regulations promulgated thereunder being hereinafter
referred to as the "Act"). The Shareholders understand that the
Common Stock of HyperDynamics has not been registered under the Act or
Securities laws of any State ("State Act") by reason of the specific
exemptions therefrom, which exemptions depend in part upon the
Shareholders subjective investment intent as expressed herein. In
furtherance of the foregoing, each Shareholder shall be required to
execute and deliver to HyperDynamics an Investment Letter, in the form
attached hereto as Exhibit C, as a condition precedent to the issuance
of a new share certificate for the Common Stock of HyperDynamics that
will be issued to him.
(j) The Shareholders hereby jointly acknowledge that they are either
(1) "Accredited Investors" as such term is defined in Regulation D
promulgated under the Act, or
(2) That they have such knowledge and experience in financial and
business matters that they are capable of evaluating the
merits and risks of the proposed exchange of MDSI's stock for
Common Stock of HyperDynamics, and
(3) That they are able to bear the economic risks of the
investment and are able to protect their own interests in an
investment of this nature.
MDSI and the Shareholders further represent and warrant that all of the
representations and warranties set forth above are true as of the date of this
Agreement, shall be true at the Closing Date and shall survive the closing for
a period of six (6) months from the Closing Date, except as to the warranties
and representations set forth in subsection (f) hereof which shall survive for
a period of three (3) years from the Closing Date.
2. REPRESENTATIONS AND WARRANTIES OF HYPERDYNAMICS.
HyperDynamics hereby makes the following express representations and warranties
to MDSI and the Shareholders:
(a) HyperDynamics is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and has the
corporate power to own its properties and carry on its business as now
being conducted. Certified copies of HyperDynamics' Certificate of
Incorporation and By-Laws have heretofore been furnished to MDSI
and/or the Shareholders by HyperDynamics, and all such copies are
true, correct and complete copies of the original Certificate of
Incorporation and By-Laws including all amendments thereto.
(b) HyperDynamics has the corporate authority to issue a total of
100,000,000 shares of $0.01 par value Common Stock, of which
____________ shares are presently issued and outstanding and
10,000,000 shares of $0.01 par value Preferred Stock, of which no
shares are presently issued and outstanding. Each person who is the
record owner of 5% or more of such shares is identified in Exhibit D
to this Agreement.
(c) Prior to the Closing Date specified herein, HyperDynamics will have
received fully paid subscriptions for a minimum of 260,000 additional
shares of its Common Stock which are
Final Reorganization Agreement
Page 3
<PAGE> 4
presently being offered to qualified prospective investors at a price
of $0.50 per share. A true and complete copy of the offering
documentation relating to such private placement, including all
exhibits thereto, is attached hereto as Exhibit E.
(d) Each person who subscribes to purchase any of the shares of Common
Stock specified in Section 2(c) shall, as a condition of sale, be
required to assent to all of the terms and conditions of this
Agreement.
(e) The audited May 30, 1996, Balance Sheet of HyperDynamics which is
attached hereto as Exhibit F, constitutes a substantially true and
correct statement of the financial condition of HyperDynamics and
HyperDynamics' assets, liabilities and income as of such date. Since
the date of such Balance Sheet, HyperDynamics has not
(1) issued any additional shares of its Common Stock, or any
options to acquire such stock, to any person,
(2) paid or declared any dividends or distributions of capital,
surplus, or profits with respect to any of its issued and
outstanding shares of Common Stock,
(3) paid or agreed to pay any consideration in redemption of any
of its issued and outstanding shares of Common Stock, or
(4) entered into any other transaction or agreement which would,
or might, materially impair the shareholder's equity of
HyperDynamics as reflected in such Balance Sheet.
(f) HyperDynamics has the corporate power and authority to execute and
perform all of its duties and obligations under the terms of this
Agreement and to issue and deliver to the Shareholders the shares of
Common Stock that are required to be issued and delivered under the
terms of this Agreement.
(g) The execution and delivery of this Agreement, and the issuance of
Common Stock required to be issued hereunder, will have been duly
authorized by all necessary corporate action and neither the execution
nor delivery of this Agreement nor the issuance of Common Stock nor
the performance, observance or compliance with the terms and
provisions of this Agreement will violate any provision of law, any
order of any court or other governmental agency, the Certificate of
Incorporation or By-Law of HyperDynamics or any indenture, agreement
or other instrument to which HyperDynamics is a party, or by which it
is bound or by which any of its property is bound.
(h) HyperDynamics is not involved in any pending or threatened litigation
which would, or might, materially affect its financial condition and
which has not been
(1) provided for in its financial statements, or
(2) disclosed to MDSI and the Shareholders in writing.
(i) There are no unpaid assessments or proposed assessments of Federal
income taxes pending against HyperDynamics. All liabilities for
Federal and State income or franchise taxes, as shown on the tax
returns filed, or to be filed, by HyperDynamics, have been paid or the
liability therefor has been provided for in the attached Balance Sheet
and all Federal and State income or franchise taxes for periods
subsequent to the periods covered by said returns likewise have been
paid or adequately accrued.
Final Reorganization Agreement
Page 4
<PAGE> 5
(j) The shares of Common Stock which will be delivered to the Shareholders
pursuant to the terms of this Agreement will, on delivery in
accordance with the terms hereof, be duly authorized, validly issued
and fully paid and nonassessable.
HyperDynamics further represents and warrants that all of the representations
and warranties set forth above are true as of the date of this Agreement, shall
be true at the Closing Date and shall survive the closing for a period of six
(6) months from the Closing Date.
3. CONDITIONS TO THE OBLIGATIONS OF HYPERDYNAMICS. The
obligations of HyperDynamics hereunder shall be subject to the following
conditions:
(a) HyperDynamics shall not have discovered any material error,
misstatement or omission in any of the representations and warranties
made by MDSI or the Shareholders herein and all the terms and
conditions of this Agreement to be performed and complied with have
been performed and complied with.
(b) There shall have been no substantial adverse changes in the financial
condition, business or operations of MDSI from June 30, 1996, until
the Closing Date, except for changes resulting from operations in the
usual and ordinary course of its business, and between such dates no
business and assets of MDSI shall have been materially adversely
affected as the result of any fire, explosion, earthquake, flood,
accident, strike, lockout, combination of the workmen, taking over of
any such assets by any governmental authorities, riot, activities of
armed forces, or Acts of God or of the public enemies.
(c) There shall have been no substantial adverse changes in the financial
condition, business or operations of HyperDynamics, except for changes
resulting from those operations in the usual ordinary course of the
business, and no business and assets of HyperDynamics shall have been
materially adversely affected as the result of any fire, explosion,
earthquake, flood, accident, strike, lockout, combination of the
workmen, taking over of any such assets by any governmental
authorities, riot, activities of armed forces, or Acts of God or of
the public enemies.
(d) HyperDynamics shall have received the opinion of legal counsel to the
effect that
(1) MDSI is a corporation duly organized, validly existing and in
good standing under the laws of Texas and has the power and
authority to own its properties and to carry on its business
in the State of Texas as of the Closing Date,
(2) MDSI's outstanding Common Stock is validly issued, fully paid
and nonassessable, and
(3) This Agreement has been duly executed and delivered by MDSI
and the Shareholders and constitutes a legal, valid and
binding obligation of the Shareholders enforceable in
accordance with its terms.
4. CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS. The
obligations of the Shareholders hereunder are subject to the following
conditions:
(a) The Shareholders shall not have discovered any material error or
misstatement in any of the representations and warranties made by
HyperDynamics herein and all the terms and conditions of this
Agreement to be performed and complied with by HyperDynamics have been
performed and complied with.
Final Reorganization Agreement
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(b) There shall have been no substantial adverse changes in the financial
condition, business or operations of HyperDynamics, except for changes
resulting from those operations in the usual ordinary course of the
business, and no business and assets of HyperDynamics shall have been
materially adversely affected as the result of any fire, explosion,
earthquake, flood, accident, strike, lockout, combination of the
workmen, taking over of any such assets by any governmental
authorities, riot, activities of armed forces, or Acts of God or of
the public enemies.
(c) The Shareholders shall have received the opinion of John L. Petersen,
legal counsel for HyperDynamics, to the effect that
(1) HyperDynamics is a corporation duly organized and validly
existing under the laws of the State of Texas and has the
power to own and operate its properties wherever the same
shall be located as of the Closing Date;
(2) the execution, delivery and performance of this Agreement by
HyperDynamics has been duly authorized by all necessary
corporate action and constitutes a legal, valid and binding
obligation of HyperDynamics enforceable in accordance with its
terms; and
(3) the Common Stock which is to be delivered to The Shareholders
pursuant to the terms of this Agreement has been validly
issued, is fully paid and nonassessable.
5. CLOSING DATE. The final closing of this Agreement shall take
place in Houston, Texas on the 19th day of July, 1996 at the hour of 11:00
a.m., local time, or at such other reasonable time and place as the parties
hereto shall agree upon.
6. EXCHANGE OF SECURITIES.
(a) Subject to the terms and conditions set forth herein, and at the time
of the closing referred to in Section 5 hereof HyperDynamics will
issue and deliver, or cause to be issued and delivered to the
Shareholders identified in Exhibit A certificates evidencing the
ownership of 604,000 shares of the authorized but unissued shares of
HyperDynamics' $0.01 par value Common Stock and concurrently therewith
the Shareholders identified in Exhibit A shall directly or through
their agent deliver or cause to be delivered to HyperDynamics,
certificates evidencing the ownership of all of the issued and
outstanding capital stock of MDSI, duly endorsed to HyperDynamics;
(b) In addition to the 604,000 shares provided for in sub-paragraph 6(a),
HyperDynamics shall issue to the Shareholders an indeterminate number
of shares to reflect the appraised fair market value of certain real
estate that may be acquired by MDSI prior to the Closing Date. In the
event that the Company shall, prior to the Closing Date, acquire
certain real estate in stock for property transactions, then the
number of HyperDynamics shares issuable to the Shareholders shall be
increased at the rate of 1 share of stock for every $2.00 in net
additional value represented by such real estate assets as determined
by a real estate appraiser acceptable to HyperDynamics.
(c) On the first anniversary of the date of this Agreement, the
Shareholders shall be entitled to receive from HyperDynamics a
contingent share issuance equal to one share of the common stock
HyperDynamics for each $1 of pre-tax net income Pre-Tax income over
$64,800 and generated by MDSI during the 12-month period commencing
July 1, 1996 and ending June 30, 1997. Such issuance shall relate back
to this agreement and shall be treated in all respects as additional
consideration for the acquisition of MDS1 by HyperDynamics.
Final Reorganization Agreement
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(d) The number of shares issuable to the Shareholders pursuant to this
Agreement have been negotiated based on the fundamental assumption
that the stabilized market price of the stock of HyperDynamics will
exceed $3 per share within 180 days after the completion of the
proposed public offering of HyperDynamics common stock and that such
common stock will, thereafter, maintain a 90-day moving average price
of at least $3 per share. In the event that the common stock of
HyperDynamics fails to reach or maintain the $3 minimum share price
contemplated by this agreement, then commencing on the first
anniversary of the date of this Agreement, the Shareholders will have
the option, for a period of 60 days, to surrender all shares
HyperDynamics stock held by them to HyperDynamics in exchange for 100%
of the issued and outstanding common stock of MDSI.
7. ACTIONS AT THE CLOSING. At the final closing of this
Agreement, HyperDynamics and the Shareholders will each deliver, or cause to be
delivered to the other, the shares of stock to be exchanged in accordance with
Section 6 of this Agreement and each party shall pay any and all Federal and
State taxes required to be paid in connection with the issuance and the
delivery of their own securities. All stock certificates shall be in the name
of the party to which the same are deliverable. In addition to the
above-mentioned exchange of certificates, the following transactions will take
place at the final closing.
HYPERDYNAMICS WILL DELIVER TO THE SHAREHOLDERS AND MDSI:
(a) Duly certified copies of corporate resolutions and other corporate
proceedings taken by HyperDynamics to authorize the execution,
delivery and performance of this Agreement;
(b) The opinion of legal counsel provided for in Section 4(c) hereof,
(c) A certificate executed by a principal officer of HyperDynamics
attesting to the fact that all of the foregoing representations and
warranties of HyperDynamics are true and correct as of the Closing
Date and that all of the conditions to the obligations of the
Shareholders which are to be performed by HyperDynamics have been
performed as of the Closing Date; and
(d) A certificate of corporate good standing for HyperDynamics from the
State of Texas which shall be dated no more than 60 days prior to the
Closing Date.
THE SHAREHOLDERS AND MDSI WILL DELIVER TO HYPERDYNAMICS:
(a) The opinion of legal counsel provided for in Section 3(e) hereof,
(b) A certificate of corporate good standing for MDSI from the Secretary
of State of the State of Texas which shall be dated no more than 60
days prior to the Closing Date; and
(c) A certificate by a principal officer of MDSI that each of the
representations and warranties of the Shareholders and MDSI are true
and correct as of the Closing Date and that all of the conditions to
the obligations of HyperDynamics which are to be performed by MDSI and
the Shareholders have been performed as of the Closing Date.
8. CONDUCT OF BUSINESS. Between the date hereof and the Closing
Date, MDSI shall conduct its business in the same manner in which it has
heretofore been conducted and the Shareholders will not permit MDSI to (1)
enter into any contract, other than in the ordinary course of business, or (2)
declare or make any distribution in the nature of a dividend or return of
capital to the Shareholders of MDSI, without first obtaining the written
consent of HyperDynamics.
Final Reorganization Agreement
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9. FUTURE REGISTRATION. The Shareholders understand that because
the Common Stock has not been registered under the Act or any State Act, they
must hold the Common Stock indefinitely, and cannot dispose of any or all of
the Common Stock unless such Common Stock is subsequently registered under the
Act and any applicable State Act, or exemptions from registration are
available. The Shareholders acknowledge and understand that they have no
independent right to require HyperDynamics to register the shares of Common
Stock. The Shareholders further understand that HyperDynamics may, as a
condition to the transfer of any of Common Stock, require that the request for
transfer by a Shareholder be accompanied by an opinion of counsel, in form and
substance satisfactory to HyperDynamics, provided at such Shareholder's
expense, to the effect that the proposed transfer does not result in violation
of the Act or any applicable State Act, unless such transfer is covered by an
effective registration statement under the Act and is in compliance with all
applicable State Acts.
10. TRANSFERABILITY. All shares of Common Stock which are issued
to the Shareholders pursuant to the terms of this Agreement shall be restricted
securities within the meaning of Regulation D of the Act. HyperDynamics shall
issue stop transfer instructions to the transfer agent for its Common Stock
with respect to the Stock and shall place the following legend on the
certificates representing such stock:
"The shares represented by this certificate have been acquired
pursuant to a transaction effected in reliance upon an exemption under
the Securities Act of 1933, as amended (the "Act"), and have not been
the subject to a Registration Statement under the Act or any state
securities act. The securities may not be sold or otherwise
transferred in the absence of such registration or applicable
exemption therefrom under the Act or any applicable state securities
act."
11. ACCESS TO INFORMATION. Concurrently herewith, HyperDynamics
has delivered to the Shareholders correct and complete copies of all documents
and records requested by the Shareholders. In addition, the Shareholders have
had the opportunity to ask questions of, and receive answers from, officers and
directors of HyperDynamics, and persons acting on its behalf concerning the
terms and conditions of the Agreement, and has received sufficient information
relating to HyperDynamics to enable them to make an informed decision with
respect to the acquisition of the Common Stock.
12. NO SOLICITATION. At no time were the Shareholders presented
with or solicited by any leaflet, public promotion meeting, circular, newspaper
or magazine article, radio or television advertisement, or any other form of
general advertising in connection with its acquisition of the Common Stock.
13. EXPENSES. The Shareholders, MDSI and HyperDynamics shall each
pay their respective expenses incident to this Agreement and the transactions
contemplated hereby, including all fees of their counsel and accountants,
whether or not such transactions shall be consummated; provided that MDSI may
pay the reasonable fees and expenses of the Shareholders counsel and its
accountants in connection with this Agreement, the proposed transactions
contemplated hereby, as well as travel and lodging expenses of its officers
related to the negotiation of this Agreement, up to a maximum of $10,000. The
Shareholders shall pay all other fees and expenses incurred by them or by MDSI
by reason of this Agreement and the proposed transactions contemplated hereby.
14. FINDERS. The Shareholders and MDSI shall indemnify and hold
HyperDynamics harmless against and with respect to all claims or brokerage or
other commissions relative to this Agreement or the transactions contemplated
hereby, based on any agreements, arrangements, or understandings claimed to
have been made by the Shareholders or MDSI with any third party.
Final Reorganization Agreement
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HyperDynamics shall indemnify and hold the Shareholders and MDSI harmless
against and with respect to all claims for brokerage or other commissions
relative to this Agreement or the transactions contemplated hereby, based in
any agreements, arrangements, or understandings claimed to have been made by
HyperDynamics with any third party. Each party to this Agreement represents
and warrants to each other party that it has not dealt with and does not know
of any person, firm or corporation asserting a brokerage, finder's or similar
claim in connection with the making or negotiation of this Agreement or the
transactions contemplated hereby.
15. ATTORNEY'S FEES. In the event of any litigation among the
parties related to this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees and costs to be fixed by the Court, said fees to
include appeal and collection of Judgment.
16. MISCELLANEOUS.
(a) This Agreement shall be controlled, construed and enforced in
accordance with the laws of the State of Texas.
(b) This Agreement shall not be assignable by either party without prior
written consent of the other.
(c) All paragraph headings herein are inserted for convenience only. This
Agreement may be executed in several counterparts, each of which shall
be deemed an original, which together shall constitute one and the same
instrument.
(d) This Agreement sets forth the entire understanding between the
parties, there being no terms, conditions, warranties or
representations other than those contained herein, and no amendments
hereto shall be valid unless made in writing and signed by the parties
hereto.
(e) This Agreement shall be binding upon and shall inure to the benefit of
the heirs, executors, administrators and assigns of the Shareholders
and MDSI and upon the successors and assigns of HyperDynamics.
(f) All notices, requests, instructions, or other documents to be given
hereunder shall be in writing and sent by registered mail:
IF TO THE SHAREHOLDERS OR MDSI: WITH COPIES TO:
MicroData Systems, Inc.
2656 South Loop West, Suite 103
Houston, Texas 77054
IF TO HYPERDYNAMICS: WITH COPIES TO:
HyperDynamics Corporation John L. Petersen
5444 Westheimer, Suite 2080 7700 Oxfordshire Drive
Houston, Texas 77056 Spring, Texas 77379
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HYPERDYNAMICS CORPORATION
Final Reorganization Agreement
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By: /s/ GREGORY J. MICEK
-----------------------------
President
MICRODATA SYSTEMS, INC. SHAREHOLDERS IDENTIFIED IN
EXHIBIT A, ATTACHED HERETO.
By: /s/ KENT WATTS By:
----------------------------- -------------------------------
President Attorney-in-fact
Attest: /s/ ILLEGIBLE
--------------------------
Final Reorganization Agreement
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EXHIBIT A
STOCKHOLDERS OF
MICRODATA SYSTEMS, INC.
NAME AND ADDRESS MDSI HYPERDYNAMICS
OF STOCKHOLDER SHARES SHARES
OWNED ISSUABLE
Kent Watts
2656 South Loop West, Suite 103
Houston, Texas 77054 480,000
Mike Watts
2656 South Loop West, Suite 103
Houston, Texas 77054 120,000
Willie Blair
2656 South Loop West, Suite 103
Houston, Texas 77054 4,000
Final Reorganization Agreement
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