Exhibit 10.5

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (this “Agreement”), effective as
of July 23, 2012 (the “Effective Date”), is between Hyperdynamics Corporation
(“Employer”), and Ray Leonard (“Executive”) (each a “Party” and together the
“Parties”).

 

WHEREAS, Employer and Employee are parties to that certain Employment Agreement,
effective July 22, 2009 (together with all amendments thereto the “2009
Employment Agreement”),

 

WHEREAS, Employer wishes to continue to employ Executive as its President, Chief
Executive Officer, and Member of the Board of Directors, and Executive wishes to
continue such employment; and

 

WHEREAS, the parties wish to amend and restate the terms and conditions of
Executive’s employment as set forth in the 2009 Employment Agreement by entering
into this Agreement;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.                                       Definitions.  As used in this
Agreement, the following terms have the following meanings:

 

(a)                                  “Affiliate” means, with respect to any
entity, any other corporation, organization, association, partnership, sole
proprietorship or other type of entity, whether incorporated or unincorporated,
directly or indirectly controlling or controlled by or under direct or indirect
common control with such entity.

 

(b)                                 “Annual Period” means the time period of
each year beginning on the first day of the Employment Term and ending on the
day before the anniversary of that date.

 

(c)                                  “Board” means the Board of Directors of
Employer.

 

(d)                                 “Cause” means a finding by the Board of acts
or omissions constituting, in the Board’s reasonable judgment, any of the
following occurring during the Employment Term:

 

(i)            a material breach of duty by Executive in the course of his
employment with Employer or its Affiliates involving fraud, acts of dishonesty
(other than inadvertent acts or omissions), disloyalty to Employer or its
Affiliates or moral turpitude constituting criminal felony;

 

(ii)           conduct by Executive that is materially detrimental to Employer
or its Affiliates, monetarily or otherwise, or that reflects unfavorably on
Employer or Executive to such an extent that Employer or its Affiliates have
been materially harmed or would be materially harmed if Executive’s employment
were not terminated;

 

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(iii)          acts or omissions of Executive that are materially in violation
of his obligations under this Agreement or at law and that have a material
adverse effect on Employer or its Affiliates;

 

(iv)          Executive’s material failure to comply with or enforce the
personnel policies of Employer or its Affiliates, specifically including those
concerning equal employment opportunity and those related to harassing conduct;

 

(v)           Executive’s material insubordination to the Board;

 

(vi)          subject to the details of Paragraph 4(b), Executive’s failure to
devote his full working time and best efforts to the performance of his
responsibilities to Employer or its Affiliates;

 

(vii)         Executive’s conviction of, or entry of a plea agreement or consent
decree or similar arrangement with respect to a felony or any material violation
of federal or state securities laws, in either case, having a material adverse
effect on Employer or its Affiliates; or

 

(viii)        Executive’s material failure to cooperate with any investigation
or inquiry authorized by the Board or conducted by a governmental authority
related to Employer’s or an Affiliate’s business or Executive’s conduct related
to Employer or an Affiliate.

 

(e)                                  “Competitor” means any person or entity
that is engaged in the acquisition, development, production and marketing of
crude oil and natural gas, chemicals and other hydrocarbon commodities in
competition with the activities of Employer or an Affiliate.

 

(f)                                    “Confidential Information” means, without
limitation, all documents or information, in whatever form or medium, concerning
or evidencing seismic data, geological data; geophysical data; energy
exploration data; oil and gas production data; sales; costs; pricing;
strategies; forecasts and long range plans; financial and tax information;
personnel information; business, marketing and operational projections, plans
and opportunities; customer, vendor, and supplier information; project and
prospect locations and leads; and production information; but excluding any such
information that is or becomes generally available to the public other than as a
result of any breach of this Agreement or other unauthorized disclosure by
Executive.

 

(g)                                 “Employment Termination Date” means the
effective date of termination of Executive’s employment as established under
Paragraph 6(g).

 

(h)                                 “Good Reason” means, with respect to
Executive, any of the following actions or failures to act:

 

(i)            a material diminution in Executive’s authority, duties, or
responsibilities in effect immediately prior to the effective date of such
change, but excluding any such change that occurs in connection with Executive’s
death, Inability to Perform or retirement;

 

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(ii)           a material reduction by the Employer of Executive’s compensation
in effect immediately prior to the effective date of such reduction;

 

(iii)          any change of more than 75 miles in the location of Executive’s
principal place of employment immediately prior to the effective date of such
change; or

 

(iv)          any material breach by the Employer of this Agreement.

 

(i)                                     “Inability to Perform” means and shall
be deemed to have occurred if Executive has been determined under Employer’s
long-term disability plan, if any,  to be eligible for long-term disability
benefits.  In the absence of Executive’s participation in, application for
benefits under, or existence of such a plan, “Inability to Perform” means
Executive’s inability to perform the essential functions of his position with
the Employer because of an illness or injury for (i) a period of six-consecutive
months or (ii) an aggregate of six months within any period of 12-consecutive
months.

 

(j)                                     “Work Product” means all ideas, works of
authorship, inventions, and other creations, whether or not patentable,
copyrightable, or subject to other intellectual-property protection, that are
made, conceived, developed or worked on in whole or in part by Executive while
employed by Employer and/or any of its Affiliates, that relate in any manner
whatsoever to the business, existing or then-proposed, of Employer and/or any of
its Affiliates, or any other business or research or development effort in which
Employer and/or any of its Affiliates engages during Executive’s employment.

 

2.                                       Employment.  Employer agrees to employ
Executive (directly or through an Affiliate), and Executive agrees to be
employed, for the Employment Term set forth in Paragraph 3.  Executive will be
employed in the position and with the duties and responsibilities set forth in
Paragraph 4(a) and upon the other terms and conditions set out in this
Agreement.  Employer and Executive agree that such employment may be through a
co-employment relationship with a professional employer organization, subject to
the requirements of Paragraph 4(a).  Executive represents, covenants and
warranties that his employment by the Employer does not and will not breach
agreements that the Executive may have entered into with other companies.  For
the avoidance of doubt, the Executive represents, covenants and warranties that
his employment by the Employer will not breach any confidentiality agreements,
non-competition agreements or non-solicitation agreements that the Executive may
have entered into with others.

 

3.                                       Term.  Executive’s employment under
this Agreement shall continue from the Effective Date for a term of one year
(the “Employment Term”), unless sooner terminated as provided in this
Agreement.  The Employment Term shall be extended automatically for an
additional one-year period as of the last day of the initial Annual Period and
each successive Annual Period thereafter on which the Executive remains employed
by Employer; provided, however, that if, prior to May 31 during any such Annual
Period, either party shall give written notice to the other that no such
automatic extension shall occur, then Executive’s employment shall terminate on
the last day of the Annual Period

 

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during which such notice is given unless sooner terminated as provided in this
Agreement.

 

4.                                       Position and Duties.

 

(a)                                  During the Employment Term, Executive shall
be employed as President and Chief Executive Officer of Employer, under the
direction and subject to the control of the Board (which direction shall be such
as is customarily exercised over a chief executive officer), and Executive shall
be responsible for the business, affairs, properties and operations of Employer
and shall have general executive charge, management and control of Employer,
with all such powers and authority with respect to such business, affairs,
properties and operations as may be reasonably incident to such duties and
responsibilities.  In addition, Executive shall have such other duties,
functions, responsibilities, and authority as are from time to time delegated to
Executive by the Board; provided, however, that such duties, functions,
responsibilities, and authority are reasonable and customary for a person
serving in the same or similar capacity of an enterprise comparable to
Employer.  The assignment to Executive of duties and/or responsibilities that
are materially inconsistent with Executive’s status, positions, duties,
responsibilities and functions with the Employer immediately prior to the
effective date of such assignment or the removal of Executive from, or the
failure to re-elect Executive to, any material corporate office of the Employer
held by Executive immediately prior to such effective date shall constitute a
material breach of this Agreement by the Employer.

 

(b)                                 During the Employment Term, Executive shall
devote his full business time, skill, and attention and his best efforts to the
business and affairs of Employer to the extent necessary to discharge fully,
faithfully, and efficiently the duties and responsibilities delegated and
assigned to Executive in or pursuant to this Agreement, except for usual,
ordinary, and customary periods of vacation and absence due to illness or other
disability and as otherwise specified in this paragraph.  Employer agrees that
it shall not be a violation of this paragraph for Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and
(iii) manage personal investments, so long as in the case of (i), (ii) and
(iii) above such activities do not significantly interfere or conflict with the
performance of Executive’s responsibilities under this Agreement or the
interests of Employer.  Executive shall not become a member of the board of
directors or committees of any other for profit business organization without
prior written consent of the Board.

 

(c)                                  In connection with Executive’s employment
under this Agreement, Executive shall be based in Houston, Texas, or at any
other place where the principal executive offices of Employer may be located
during the Employment Term, subject to the provisions of Paragraph 1(h)(iii). 
Executive also will engage in such travel as the performance of Executive’s
duties in the business of Employer may require.

 

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(d)                                 All services that Executive may render to
Employer or any of its Affiliates in any capacity during the Employment Term
shall be deemed to be services required by this Agreement and the consideration
for such services is that provided for in this Agreement.

 

(e)                                  Executive hereby acknowledges that he has
read and is familiar with Employer’s policies regarding business ethics and
conduct, and will comply with all such provisions, and any amendments thereto,
during the Employment Term.

 

5.                                       Compensation and Related Matters.

 

(a)                                  Base Salary.  During each Annual Period of
the Employment Term, Employer shall pay to Executive for his services under this
Agreement an annual base salary (“Base Salary”).  The Base Salary on the
Effective Date shall be $400,000.  The Base Salary is subject to adjustment, at
the discretion of the Board, but in no event shall Employer pay Executive a Base
Salary less than that set forth above, or than any increased Base Salary later
in effect, without the consent of Executive.  The Base Salary is earned pro rata
and shall be payable in installments in accordance with the general payroll
practices of Employer, or as otherwise mutually agreed upon.

 

(b)                                 Annual Incentives.

 

(i)            Beginning with the Effective Date, Executive will participate in
any incentive compensation plan (ICP) applicable to Executive’s position, as may
be adopted by Employer from time to time and in accordance with the terms of
such plan.  Executive’s annual cash target award opportunity under the ICP will
be 100% of Executive’s Base Salary with a threshold of 50% and a 200% maximum,
and shall be subject to such other terms, conditions and restrictions as may be
established by the Board or the Compensation Committee of the Board (“ICP Bonus
Award”).  Executive and the Board have agreed to a set of performance metrics
for the ICP Bonus Award applicable to the present Annual Period.  With respect
to any subsequent Annual Period(s), Executive will develop and submit to the
Compensation Committee of the Board, for review and approval, proposed
performance metrics by no later than May 1 of the then-current Annual Period,
and the Board and Executive will strive to have the performance metrics
finalized by no later than May 15.  Any ICP Bonus Award determined earned will
be paid to Executive within 30 days after the end of the Annual Period to which
it relates.

 

(ii)           In addition to any ICP Bonus Award that he earns under the ICP,
Employer will also grant Executive an annual award of stock options under its
equity incentive plan then in effect in an amount equal to 50% of the number of
dollars of the cash award (e.g., if the cash award is $200,000, Executive would
receive an award of options to purchase 100,000 shares of Employer’s common
stock) (the “ICP Options”).  The ICP Options will have an exercise price equal
to the fair market value of Employer’s common stock on the grant date, will have
a five-year life, and will vest equally over a three-year period on each
anniversary of the grant date.

 

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(c)                                  Employee Benefits.  During the Employment
Term, Executive shall be entitled to participate in all employee benefit plans,
programs, and arrangements that are generally made available by Employer to its
senior executives, including without limitation Employer’s life insurance,
long-term disability, and health plans.  Executive acknowledges and agrees that
cooperation and participation in medical or physical examinations may be
required by one or more insurance companies in connection with the applications
for such life and/or disability insurance policies.

 

(d)                                 Expenses.  Executive shall be entitled to
receive reimbursement for all reasonable expenses incurred by Executive during
the Employment Term in performing his duties and responsibilities under this
Agreement, consistent with Employer’s policies or practices for reimbursement of
expenses incurred by other senior executives of Employer (“Business Expenses”). 
Notwithstanding the foregoing, (i) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (ii) the reimbursement must be made on
or before the last day of the calendar year following the calendar year in which
the expense was incurred and (iii) the right to reimbursement shall not be
subject to liquidation or exchange for any other benefit.

 

(e)                                  Vacations.  During each Annual Period of
the Employment Term, Executive shall be eligible for four weeks’ paid vacation,
as well as sick pay and other paid and unpaid time off in accordance with the
policies and practices of Employer.  Executive agrees to use his vacation and
other paid time off at such times that are (i) consistent with the proper
performance of his duties and responsibilities and (ii) mutually convenient for
Employer and Executive.

 

(f)                                    Fringe Benefits.  During the Employment
Term, Executive shall be entitled to the perquisites and other fringe benefits
that are made available by Employer to its senior executives generally and to
such perquisites and fringe benefits that are made available by Employer to
Executive in particular, subject to any applicable terms and conditions of any
specific perquisite or other fringe benefit.  However, the Executive shall NOT
receive a fringe benefit for club memberships or non-profit organization
memberships.

 

(g)                                 Directors and Officers (D&O) Liability
Insurance.  Employer has obtained a D&O insurance policy and provided Executive
a copy of the policy.

 

6.                                       Termination of Employment.

 

(a)                                  Death.  Executive’s employment shall
terminate automatically upon his death.

 

(b)                                 Inability to Perform.  Employer may
terminate Executive’s employment for Inability to Perform.

 

(c)                                  Termination by Employer for Cause.  Subject
to the provisions of this Paragraph 6(c), Employer may terminate Executive’s
employment for Cause by providing Executive with a Notice of Termination as set
out in Paragraph 6(f).  If Employer

 

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notifies Executive of its intent to terminate Executive’s employment in whole or
part under provisions (ii), (iii), (iv), (v), (vi) or (viii) of the definition
of Cause, the Notice of Termination must first provide Executive with a
reasonable period of time to correct those circumstances or events Employer
contends give rise to the existence of Cause under such provision(s) (the
“Correction Period”), but not to the extent the Board makes a reasonable, good
faith determination that those circumstances or events cannot reasonably be
corrected, in which case, the Notice of Termination must describe the basis for
that determination.  A 30-day Correction Period shall be presumptively
reasonable.  In all cases, Executive will be given the opportunity within 30
calendar days after his receipt of Employer’s Notice of Termination for Cause to
defend himself with respect to the circumstances or events specified in such
notice and in a manner and under such procedures as the Board may establish.  At
a minimum, such procedures shall allow Executive to meet with the Board, with
Executive’s attorney if desired by Executive.  Nothing in this Paragraph
6(c) precludes informal discussions between Executive and any member of the
Board regarding such circumstances or events.

 

(d)                                 Termination by Executive for Good Reason. 
Executive may terminate his employment for Good Reason.  To exercise his right
to terminate for Good Reason, Executive must provide a Notice of Termination
(subject to Employer’s opportunity to remedy as described below) within 90 days
after the date he first becomes aware of the condition(s) giving rise to the
Good Reason; otherwise, Executive is deemed to have accepted the condition(s),
or Employer’s correction of such condition(s), that may have given rise to the
existence of Good Reason.  Employer shall have 30 days to remedy the Good Reason
condition(s).  If not remedied within that 30-day period, Executive may
terminate for Good Reason in accordance with the Notice of Termination.

 

(e)                                  Termination by Either Party Without Cause
or Without Good Reason.  Either Employer or Executive may terminate Executive’s
employment without Cause or without Good Reason upon at least 30 days’ prior
written notice to the other party.  Upon termination without Cause or upon
receipt of a Notice of Termination from Executive without Good Reason, Employer
may elect to relieve Executive of his duties, and pay his pro rata Base Salary
and provide him his employment benefits for the notice period, and Executive
shall resign from the Board, none of which shall constitute Good Reason.

 

(f)                                    Notice of Termination.  Any termination
of Executive’s employment by Employer or by Executive (other than a termination
pursuant to Paragraph 6(a)) shall be communicated by a written Notice of
Termination.  A “Notice of Termination” is a written notice that must
(i) indicate the specific termination provision in this Agreement relied upon;
(ii) in the case of a termination for Inability to Perform, Cause, or Good
Reason, set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive’s employment under the provision
invoked; and (iii) if the termination is by Executive under Paragraph 6(e), or
by Employer for any reason, specify the Employment Termination Date.

 

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The failure by Employer or Executive to set forth in the Notice of Termination
any fact or circumstance that contributes to a showing of Cause or Good Reason
shall not waive any right of Employer or Executive or preclude either of them
from asserting such fact or circumstance in enforcing or defending their rights.

 

(g)                                 Employment Termination Date.  The Employment
Termination Date, whether occurring before or after a change of control of the
Employer, shall be as follows: (i) if Executive’s employment is terminated by
his death, the date of his death; (ii) if Executive’s employment is terminated
by Employer because of his Inability to Perform the date specified in the Notice
of Termination, which date shall be no earlier than the date such notice is
given; (iii) if Executive’s employment is terminated by Employer for Cause, the
date specified in the Notice of Termination, which date shall not be earlier
than the last day of the Correction Period (if applicable); (iv) if Executive’s
employment is terminated by Executive for Good Reason, the last day of the
Employer’s remedy period, which date shall be 30 days after the date on which
the Notice of Termination is given in accordance with Paragraph 6(d); (v) if the
termination is under Paragraph 6(e), the date specified in the Notice of
Termination, which date shall be no earlier than 30 days after the date such
notice is given; or (vi) if Executive’s employment is terminated by expiration
of the Employment Term, the date the Employment Term expires.

 

(h)                                 Deemed Resignation.  In the event of
termination of Executive’s employment, Executive agrees that if at such time he
is a member of the Board or is an officer of Employer or a director or officer
of any of its Affiliates, he shall be deemed to have resigned from such
position(s) effective on the Employment Termination Date, unless the Board and
Executive agree in writing prior to the Employment Termination Date that
Executive shall remain a member of the Board, in which case Executive shall not
be deemed to have resigned his position as a member of the Board merely by
virtue of the termination of his employment.  Executive agrees to execute and
deliver any documents evidencing his resignation from such positions that
Employer may reasonably request; provided, however, that no such document shall
affect the date that Executive ceased to be a Board member as described above
such that Executive continues to have duties as a Board member beyond the date
specified in the preceding sentence.

 

(i)                                     Investigation; Suspension.  Employer may
suspend Executive with pay pending (a) an investigation as described in
Paragraph 1(d)(viii), or (b) a determination by the Board whether Executive has
engaged in acts or omissions constituting Cause.  Such a paid suspension shall
not constitute a termination of Executive’s employment, or Good Reason. 
Executive agrees to cooperate with Employer in connection with any such
investigation.

 

7.                                       Compensation Upon Termination of
Employment.

 

(a)                                  Death.  If Executive’s employment is
terminated by reason of Executive’s death, Employer shall pay to such person as
Executive shall designate in a written notice

 

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to Employer (or, if no such person is designated, to his estate) any unpaid
portion of Executive’s Base Salary earned pro rata through the Employment
Termination Date (the “Compensation Payment”), any earned but unused vacation
(the “Vacation Payment”), and any unreimbursed Business Expenses, at the time
and in the manner required by applicable law but in no event later than 30
business days after the Employment Termination Date.  In addition, all Employer
stock options and restricted stock awards held by Executive as of the Employment
Termination Date shall be fully and immediately vested, and Executive’s estate
or other authorized representative or beneficiary will have twelve months after
the Employment Termination Date, to exercise all Employer stock options,
provided that in no event may such stock options be exercised after the latest
date upon which the options would have expired by their original terms.

 

(b)                                 Inability to Perform.  If Executive’s
employment is terminated by reason of Executive’s Inability to Perform, Employer
shall pay to Executive the Compensation Payment, the Vacation Payment, and any
unreimbursed Business Expenses at the time and in the manner required by
applicable law but in no event later than 30 business days after the Employment
Termination Date.  In addition, all Employer stock options and restricted stock
awards held by Executive as of the Employment Termination Date shall be fully
and immediately vested, and Executive will have twelve months after the
Employment Termination Date, to exercise all Employer stock options, provided
that in no event may such stock options be exercised after the latest date upon
which the options would have expired by their original terms.

 

(c)                                  Termination by Executive Without Good
Reason or Upon Expiration of Employment Term Due to Executive Notice.  If
Executive’s employment is terminated by Executive pursuant to and in compliance
with Paragraph 6(e) or if Executive notifies the Employer under Paragraph 3 of
the discontinuance of automatic extensions of the Employment Term and as a
result Executive’s employment ends upon the expiration of the Employment Term,
Employer shall pay to Executive the Compensation Payment, the Vacation Payment,
and any unreimbursed Business Expenses, at the time and in the manner required
by applicable law but in no event later than 30 business days after the
Employment Termination Date.

 

(d)                                 Termination for Cause.  If Executive’s
employment is terminated by Employer for Cause, Employer shall pay to Executive
the Compensation Payment, the Vacation Payment, and any unreimbursed Business
Expenses, at the time and in the manner required by applicable law but in no
event later than 30 business days after the Employment Termination Date.

 

(e)                                  Termination Without Cause or With Good
Reason or Upon Expiration of Employment Term Due to Employer Notice.  If
Executive’s employment is terminated by Employer for any reason other than
death, Inability to Perform, or Cause; is terminated by Executive for Good
Reason during the Employment Term; or ends upon the expiration of the Employment
Term due to the Employer

 

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notifying Executive under Paragraph 3 of the discontinuance of automatic
extensions of the Employment Term,

 

(i)            Employer shall pay to Executive the Compensation Payment, the
Vacation Payment, and any unreimbursed Business Expenses, at the time and in the
manner required by applicable law but in no event later than 30 business days
after the Employment Termination Date.

 

(ii)           In addition but subject to subparagraph (iii) of this Paragraph
7(e), Employer shall pay or provide to Executive in lieu of any other severance
or separation benefits (including, without limitation, those set forth in
Employer’s Involuntary Termination Severance Plan), the following if, within 45
days (or within the expiration of such other applicable review and revocation
period as may then be mandated by law) after the Employment Termination Date,
Executive has signed a general release agreement and does not revoke such
release:

 

(A)          An amount equal to Executive’s annual Base Salary as in effect on
the Employment Termination Date;

 

(B)           An amount equal to Executive’s annual ICP Bonus Award at the
target level for the performance period in effect on the Employment Termination
Date;

 

(C)           Full and immediate vesting of all Employer stock options and
restricted stock awards held by Executive as of the Employment Termination Date;

 

(D)          Executive will have twelve months after the Employment Termination
Date, to exercise all Employer stock options, provided that in no event may such
stock options be exercised after the latest date upon which the options would
have expired by their original terms.

 

Amounts payable under Paragraphs 7(e)(ii)(A)-(B) shall be payable to Executive
in a single lump sum payment in cash within 60 days after the Employment
Termination Date; provided that if such 60-day period begins in one taxable year
and ends in a subsequent taxable year, payment shall occur in the second taxable
year.

 

(iii)          Employer’s obligation under Paragraph 7(e)(ii) is limited as
follows:

 

(A)          If Executive engages in any conduct that materially violates
Paragraph 8 or engages in any of the Restricted Activities described in
Paragraph 9, Employer’s obligation to make payments to Executive under Paragraph
7(e)(ii), if any such obligation remains, shall end as of the date Employer so
notifies Executive in writing; provided that such obligation shall not end if an
arbitrator finally determines in accordance with Paragraph 28 that Executive

 

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did not materially violate Paragraph 8 or engage in any of the Restricted
Activities described in Paragraph 9; and

 

(B)           If Executive is found guilty or enters into a plea agreement,
consent decree, or similar arrangement with respect to any felony criminal
offense or any material violation of federal or state securities laws, or has a
cease-and-desist order, injunction, or other penalty or judgment issued or
entered in any material civil enforcement action brought against him by any
United States regulatory agency or by a court of competent jurisdiction in a
proceeding commenced by such a regulatory agency (in either case, regardless of
whether Executive admits or denies the substantive allegations, and in each case
for actions or omissions related to his employment with Employer or any of its
Affiliates), (1) Employer’s obligation to make payments to Executive under this
Paragraph 7(e)(ii) shall end as of the date that Employer so notifies Executive
in writing, and (2) Executive shall repay to Employer any amounts paid to him
pursuant to this Paragraph 7(e)(ii) within 30 days after receipt of a written
request to do so by Employer.

 

(f)                                    Parachute Payment Excise Tax Gross Up. 
In the event that it is determined that any payment (other than the Gross-Up
payment provided for in this Paragraph 7(f)) or distribution by Employer or any
of its Affiliates to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option or similar right,
or the lapse or termination of any restriction on or the vesting or
exercisability of any of the foregoing (a “Payment”), would be subject to the
excise tax imposed by Section 4999 of the Code (or any successor provision
thereto) by reason of being considered “contingent on a change in ownership or
control” of Employer, within the meaning of Section 280G of the Code or any
successor provision thereto (such tax being hereafter referred to as the “280G
Excise Tax”), then Executive will be entitled to receive an additional payment
or payments (a “280G Gross-Up Payment”).  The 280G Gross-Up Payment will be in
an amount such that, after payment by Executive of all taxes, including any 280G
Excise Tax imposed upon the 280G Gross-Up Payment, Executive retains an amount
of the 280G Gross-Up Payment equal to the 280G Excise Tax imposed upon the
Payment.  For purposes of determining the amount of the 280G Gross-Up Payment,
Executive will be considered to pay (x) federal income taxes at the highest rate
in effect in the year in which the 280G Gross-Up Payment will be made and
(y) state and local income taxes at the highest rate in effect in the state or
locality in which the 280G Gross-Up Payment would be subject to state or local
tax, net of the maximum reduction in federal income tax that could be obtained
from deduction of such state and local taxes.  The determination of whether the
280G Excise Tax would be imposed, the amount of such 280G Excise Tax, and the
calculation of the amounts referred to in this

 

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Paragraph 7(f) will be made at the expense of Employer by Employer’s regular
independent accounting firm (the “Accounting Firm”), which shall provide
detailed supporting calculations.  Any determination by the Accounting Firm will
be binding upon Employer and Executive.  The 280G Gross-Up Payment will be paid
to Executive as soon as administratively practicable following, but no later
than the end of the calendar year in which falls the date on which Executive
remits the related taxes.

 

(g)                                 Section 409A Excise Tax Gross Up.  Executive
and Employer each acknowledges and agrees that (i) Executive’s employment did
not end upon expiration of the Employment Term set forth in the 2009 Employment
Agreement, but instead continued pursuant to this Agreement and, therefore,
(ii) that Executive is due no payments or benefits under Paragraph 7(e) of the
2009 Employment Agreement.  Nevertheless, if the terms of this Agreement (as may
be modified pursuant to Paragraph 7(j)) or the 2009 Employment Agreement or any
action or omission by the Employer in its performance under this Agreement or
the 2009 Agreement, causes any payment or benefit received or to be received by
Executive from the Employer pursuant to this Agreement or the 2009 Agreement
(the “Agreement Payments”) to be subject to the excise tax and additional
interest imposed by Code Section 409A(a)(1)(B) (the “409A Excise Tax”), the
Employer shall pay Executive, at the time specified below, an additional amount
(the “409A Gross-Up Payment”) such that the net amount that Executive retains,
after deduction of the 409A Excise Tax on the Agreement Payments; any federal,
state, and local income and employment taxes upon the 409A Gross-Up Payment; any
additional 409A Excise Taxes upon the 409A Gross-Up Payment; and any interest,
penalties, or additions to tax payable by Executive with respect thereto, shall
be equal to the total present value (using the applicable federal rate (as
defined in section 1274(d) of the Code) in such calculation) of the Agreement
Payments at the time such payments are to be made.  Payment of such additional
amount shall occur on or before the earlier to occur of (i) the date which the
Employer is required to withhold any such taxes and (ii) the date on which
Executive remits such taxes to the Internal Revenue Service (to the extent not
withheld).  For purposes of determining the amount of the 409A Gross-Up Payment,
Executive shall be deemed to pay federal income taxes at the highest marginal
rates of federal income taxation applicable to individuals in the calendar year
in which the 409A Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rates of taxation applicable to individuals as are
in effect in the state and locality of Executive’s residence in the calendar
year in which the 409A Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes that can be obtained from deduction of such
state and local taxes, taking into account any limitations applicable to
individuals subject to federal income tax at the highest marginal rates.  The
409A Gross-Up Payment is not intended to duplicate any payments that may be due
under Section 7(e) of this Agreement and will not limit in any way Executive’s
obligations with respect to executing and not revoking a general release as
provided under Section 7(e).

 

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(h)                                 Health Insurance.  In addition, if
Executive’s employment with Employer or an Affiliate or successor of Employer is
terminated or ends under the circumstances set forth in Paragraph 7(e),
Executive will receive, in addition to any other payments due under this
Agreement, the following benefit: if, at the time of the Employment Termination
Date, Executive participates in one or more health plans offered or made
available by Employer and Executive is eligible for and elects to receive
continued coverage under such plans in accordance with the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”) or any successor law, Employer will
reimburse Executive during the 18-month period following the Employment
Termination Date, for the difference between the total amount of the monthly
COBRA premiums for the same coverage as in effect on the Employment Termination
Date, that are actually paid by Executive for such continued health plan
benefits and the total monthly amount of the same premiums charged to active
senior executives of Employer for health insurance coverage.  Such reimbursement
shall be made within the 90-day period following Executive’s payment of each
monthly COBRA premium.  Provided, however, that Employer’s reimbursement
obligation under this Paragraph 7(h) shall terminate upon the earlier of (i) the
expiration of the time period described above or (ii) the date Executive becomes
eligible for health insurance coverage under a subsequent employer’s plan
without being subject to any preexisting-condition exclusion under that plan,
which occurrence Executive shall promptly report to Employer.

 

(i)                                     Exclusive Compensation and Benefits. 
The compensation and benefits described in this Paragraph 7, along with the
associated terms for payment, constitute all of Employer’s obligations to
Executive with respect to the ending of Executive’s employment with Employer
and/or its Affiliates, subject to Paragraph 24 and the remainder of this
Paragraph 7(i).  Accordingly, Executive and Employer expressly acknowledge and
agree that, following the Employment Termination Date, Executive shall have no
rights to any employment by Employer or its Affiliates (including employment as
described in Paragraphs 2, 3 and 4 of this Agreement), and no rights to any
further compensation or benefits under Paragraph 5 of this Agreement, provided
that Executive shall remain eligible for coverage under Employer’s D&O insurance
policy or policies to the extent provided by the terms of such policy or
policies.  Executive and Employer further acknowledge and agree that nothing in
this Agreement is intended to limit or terminate (i) any obligations of Employer
or Executive under the other terms of this Agreement, including, but not limited
to, with respect to Employer, its obligations under Paragraphs 12 and 20, and,
with respect to Executive, his obligations under Paragraphs 6(h), 8, 9, 10, 13,
22, and 23, or (ii) any earned, vested benefits (other than any entitlement to
severance or separation pay, if any) that Executive may have under the
applicable provisions of any benefit plan of Employer in which Executive is
participating at the time of the termination of employment.

 

(j)                                     Code Section 409A Matters.  This
Agreement is intended to comply with Code Section 409A and any ambiguous
provisions will be construed in a manner that is compliant with or exempt from
the application of Code Section 409A.  If a provision of the Agreement would
result in the imposition of an applicable tax

 

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under Code Section 409A, the parties agree that such provision shall be reformed
to avoid imposition of the applicable tax, with such reformation effected in a
manner that has the most favorable result to Executive.

 

For purposes of Code Section 409A, each payment or amount due under this
Agreement shall be considered a separate payment, and Executive’s entitlement to
a series of payments under this Agreement is to be treated as an entitlement to
a series of separate payments.

 

If (i) Executive is a “specified employee,” as such term is defined in Code
Section 409A and determined as described below in this Paragraph 7(j), and
(ii) any payment due under this Agreement is subject to Code Section 409A and is
required to be delayed under Code Section 409A because Executive is a specified
employee, that payment shall be payable on the earlier of (A) the first business
day that is six months after Executive’s separation from service, as such term
is defined in Code Section 409A, (B) the date of Executive’s death, or (C) the
date that otherwise complies with the requirements of Section 409A.  This
Paragraph 7(j) shall be applied by accumulating all payments that otherwise
would have been paid within six months after Executive’s separation and paying
such accumulated amounts on the earliest business day which complies with the
requirements of Code Section 409A.  For purposes of determining the identity of
specified employees, the Board may establish procedures as it deems appropriate
in accordance with Code Section 409A.

 

(k)                                  Payment after Executive’s Death.  In the
event of Executive’s death after he becomes entitled to a payment or payments
pursuant to this Paragraph 7, any remaining unpaid amounts shall be paid, at the
time and in the manner such payments otherwise would have been paid to
Executive, to such person as Executive shall designate in a written notice to
Employer (or, if no such person is designated, to his estate).

 

(l)                                     Offset.  Executive agrees that Employer
may set off against, and Executive authorizes Employer to deduct from, any
payments due to Executive, or to his heirs, legal representatives, or
successors, as a result of the termination of Executive’s employment any amounts
which may be due and owing to Employer or any of its Affiliates by Executive,
whether arising under this Agreement or otherwise; provided, however, that any
such set off and deduction shall be made only to the extent it does not result
in the imposition of any excise tax under Code Section 409A to the extent
applicable.

 

8.                                       Confidential Information.

 

(a)                                  Executive acknowledges and agrees that
(i) Employer and its Affiliates are engaged in a highly competitive business;
(ii) Employer and its Affiliates have expended considerable time and resources
to develop goodwill with their customers, vendors, and others, and to create,
protect, and exploit Confidential Information; (iii) Employer must continue to
prevent the dilution of its and its Affiliates’ goodwill and unauthorized use or
disclosure of its Confidential Information to avoid harm to its legitimate
business interests; (iv) in the acquisition, development and marketing of crude
oil and natural gas, chemicals or

 

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other hydrocarbon products, his participation in or direction of Employer’s or
its Affiliates’ day-to-day operations and strategic planning are an integral
part of Employer’s continued success and goodwill; (v) given his position and
responsibilities, he necessarily will be creating Confidential Information that
belongs to Employer and enhances Employer’s goodwill, and in carrying out his
responsibilities he in turn will be relying on Employer’s goodwill and the
disclosure by Employer to him of Confidential Information; and (vi) he will have
access to Confidential Information that could be used by any Competitor of
Employer in a manner that would harm Employer’s competitive position in the
marketplace and dilute its goodwill.  Employer acknowledges and agrees that
nothing in this Agreement precludes Executive from accepting employment from any
third party employer after termination of employment with Employer and its
Affiliates for whatever reason, provided that Executive complies with his
obligations under Paragraph 8(d) and at law with respect to the Confidential
Information.

 

(b)                                 Employer acknowledges and agrees that
Executive must have and continue to have throughout his employment the benefits
and use of its and its Affiliates’ goodwill and Confidential Information in
order to properly carry out his responsibilities.  Employer accordingly promises
upon execution and delivery of this Agreement to provide Executive immediate and
continuing access to Confidential Information and to authorize him to engage in
activities that will create new and additional Confidential Information.

 

(c)                                  Employer and Executive thus acknowledge and
agree that during Executive’s employment with Employer, and upon execution and
delivery of this Agreement, he (i) will receive Confidential Information that is
unique, proprietary, and valuable to Employer and/or its Affiliates; (ii) will
create Confidential Information that is unique, proprietary, and valuable to
Employer and/or its Affiliates; and (iii) will benefit, including without
limitation by way of increased earnings and earning capacity, from the goodwill
Employer and its Affiliates have generated and from the Confidential
Information.

 

(d)                                 Accordingly, Executive acknowledges and
agrees that at all times during his employment by Employer and/or any of its
Affiliates and thereafter:

 

(i)            all Confidential Information shall remain and be the sole and
exclusive property of Employer and/or its Affiliates;

 

(ii)           he will protect and safeguard all Confidential Information;

 

(iii)          he will hold all Confidential Information in strictest confidence
and not, directly or indirectly, disclose or divulge any Confidential
Information to any person other than an officer, director, or employee of, or
legal counsel for, Employer or its Affiliates, to the extent necessary for the
proper performance of his responsibilities unless authorized to do so by
Employer or compelled to do so by law or valid legal process;

 

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(iv)          if he believes he is compelled by law or valid legal process to
disclose or divulge any Confidential Information, he will notify Employer in
writing sufficiently in advance of any such disclosure to allow Employer the
opportunity to defend, limit, or otherwise protect its interests against such
disclosure;

 

(v)           at the end of his employment with Employer for any reason or at
the request of Employer at any time, he will return to Employer all Confidential
Information and all copies thereof, in whatever tangible form or medium,
including electronic; and

 

(vi)          absent the promises and representations of Executive in this
Paragraph 8 and in Paragraph 9, Employer would require him immediately to return
any tangible Confidential Information in his possession, would not provide
Executive with new and additional Confidential Information, would not authorize
Executive to engage in activities that will create new and additional
Confidential Information, and would not enter or have entered into this
Agreement.

 

9.                                       Nonsolicitation Obligations.  In
consideration of Employer’s promises to provide Executive with Confidential
Information and to authorize him to engage in activities that will create new
and additional Confidential Information upon execution and delivery of this
Agreement, and the other promises and undertakings of Employer in this
Agreement, Executive agrees that, while he is employed by Employer and/or any of
its Affiliates and for a 2-year period following the end of that employment for
any reason, he shall not engage in any of the following activities (the
“Restricted Activities”):

 

(a)                                  He will not, whether on his own behalf or
on behalf of any other individual, partnership, firm, corporation or business
organization, either directly or indirectly solicit, induce, persuade, or
entice, or endeavor to solicit, induce, persuade, or entice, any person who is
then employed by or otherwise engaged to perform services for Employer or its
Affiliates to leave that employment or cease performing those services; and

 

(b)                                 He will not, whether on his own behalf or on
behalf of any other individual, partnership, firm, corporation or business
organization, either directly or indirectly solicit, induce, persuade, or
entice, or endeavor to solicit, induce, persuade, or entice, any person who is
then a customer, supplier, or vendor of Employer or any of its Affiliates to
cease being a customer, supplier, or vendor of Employer or any of its Affiliates
or to divert all or any part of such person’s or entity’s business from Employer
or any of its Affiliates.

 

Executive acknowledges and agrees that the restrictions contained in this
Paragraph 9 are ancillary to an otherwise enforceable agreement, including
without limitation the mutual promises and undertakings set forth in Paragraph
8; that Employer’s promises and undertakings set forth in Paragraph 8 and
Executive’s position and responsibilities with Employer give rise to Employer’s
interest in restricting Executive’s post-employment activities; that such
restrictions are designed to enforce Executive’s promises and undertakings set
forth in this Paragraph 9 and his common-law obligations and duties owed to
Employer and its Affiliates; that the restrictions are reasonable and necessary,
are valid and enforceable under Texas law, and do not impose a

 

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greater restraint than necessary to protect Employer’s goodwill, Confidential
Information, and other legitimate business interests; that he will immediately
notify Employer in writing should he believe or be advised that the restrictions
are not, or likely are not, valid or enforceable under Texas law or the law of
any other state that he contends or is advised is applicable; that the mutual
promises and undertakings of Employer and Executive under Paragraphs 8 and 9 are
not contingent on the duration of Executive’s employment with Employer; that
absent the promises and representations made by Executive in this Paragraph 9
and Paragraph 8, Employer would require him to return any Confidential
Information in his possession, would not provide Executive with new and
additional Confidential Information, would not authorize Executive to engage in
activities that will create new and additional Confidential Information, and
would not enter or have entered into this Agreement; and that his obligations
under Paragraphs 8 and 9 supplement, rather than supplant, his common-law duties
of confidentiality and loyalty owed to Employer.

 

Employer agrees that any action that is undertaken by a subsequent employer of
Executive will not be treated as an action by Executive for purposes of the
foregoing provisions of this Paragraph 9 unless Executive personally engages in
a Restricted Activity, whether directly or indirectly.

 

10.                                 Intellectual Property.

 

(a)                                  In consideration of Employer’s promises and
undertakings in this Agreement, Executive agrees that all Work Product will be
disclosed promptly by Executive to Employer, shall be the sole and exclusive
property of Employer, and is hereby assigned to Employer, regardless of whether
(i) such Work Product was conceived, made, developed or worked on during regular
hours of his employment or his time away from his employment, (ii) the Work
Product was made at the suggestion of Employer; or (iii) the Work Product was
reduced to drawing, written description, documentation, models or other tangible
form.  Without limiting the foregoing, Executive acknowledges that all original
works of authorship that are made by Executive, solely or jointly with others,
within the scope of his employment and that are protectable by copyright are
“works made for hire,” as that term is defined in the United States Copyright
Act (17 U.S.C., Section 101), and are therefore owned by Employer from the time
of creation.

 

(b)                                 Executive agrees to assign, transfer, and
set over, and Executive does hereby assign, transfer, and set over to Employer,
all of his right, title and interest in and to all Work Product, without the
necessity of any further compensation, and agrees that Employer is entitled to
obtain and hold in its own name all patents, copyrights, and other rights in
respect of all Work Product.  Executive agrees to (i) cooperate with Employer
during and after his employment with Employer in obtaining patents or copyrights
or other intellectual-property protection for all Work Product; (ii) execute,
acknowledge, seal, and deliver all documents tendered by Employer to evidence
its ownership thereof throughout the world; and (iii) cooperate with Employer in
obtaining, defending, and enforcing its rights therein.

 

17

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(c)                                  Executive represents that there are no
other contracts to assign inventions or other intellectual property that are now
in existence between Executive and any other person or entity.  Executive
further represents that he has no other employment or undertakings that might
restrict or impair his performance of this Agreement.  Executive will not in
connection with his employment by Employer, use or disclose to Employer any
confidential, trade secret, or other proprietary information of any previous
employer or other person that Executive is not lawfully entitled to disclose.

 

11.                                 Reformation.  If the provisions of
Paragraphs 8, 9, or 10 are ever deemed by a court to exceed the limitations
permitted by applicable law, Executive and Employer agree that such provisions
shall be, and are, automatically reformed to the maximum limitations permitted
by such law.

 

12.                                 Indemnification and Insurance.  Employer
shall indemnify Executive both (i) to the fullest extent permitted by the laws
of the State of Delaware, and (ii) in accordance with the more favorable of
Employer’s certificate of incorporation, bylaws and standard indemnification
agreement as in effect on the Effective Date or as in effect on the date as of
which the indemnification is owed.  In addition, Employer shall provide
Executive with coverage under directors’ and officers’ liability insurance
policies on terms not less favorable than those provided to any of its other
directors and officers as in effect from time to time.

 

13.                                 Assistance in Litigation.  During the
Employment Term and thereafter for the lifetime of Executive, Executive shall,
upon reasonable notice, furnish such information and proper assistance to
Employer or any of its Affiliates as may reasonably be required by Employer in
connection with any litigation, investigations, arbitrations, and/or any other
fact-finding or adjudicative proceedings involving Employer or any of its
Affiliates.  This obligation shall include, without limitation, to promptly upon
request meet with counsel for Employer or any of its Affiliates and provide
truthful testimony at the request of Employer or as otherwise required by law or
valid legal process.  Following the Employment Term, Employer shall reimburse
Executive for all reasonable out-of-pocket expenses incurred by Executive and
approved in advance by Employer in rendering such assistance (such as travel,
parking, and meals but not attorney’s fees), but shall have no obligation to
compensate Executive for his time in providing information and assistance in
accordance with this Paragraph 13, provided that such reimbursement shall be
made on or before the last day of the calendar year following the calendar year
in which the expense is incurred, and provided further that Executive’s
obligations under this Paragraph 13 following the Employment Termination Date
shall not unreasonably interfere with Executive’s employment or other activities
and endeavors.

 

14.                                 No Obligation to Pay.  With regard to any
payment due to Executive under this Agreement, it shall not be a breach of any
provision of this Agreement for Employer to fail to make such payment to
Executive if (i) Employer is prohibited from making the payment; (ii) Employer
would be obligated to recover the payment if it was made; or (iii) Executive
would be obligated to repay the payment if it was made; provided, however,

 

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that this Paragraph 14 shall only apply if such prohibition or obligation is
legally imposed by statute or regulation.

 

15.                                 Deductions and Withholdings.  With respect
to any payment to be made to Executive, Employer shall deduct, where applicable,
any amounts authorized by Employee, and shall withhold and report all amounts
required to be withheld and reported by applicable law.

 

16.                                 Notices.  All notices, requests, demands,
and other communications required or permitted to be given or made by either
party shall be in writing and shall be deemed to have been duly given or made
(a) when delivered personally, or (b) when deposited in the United States mail,
first class registered or certified mail, postage prepaid, return receipt
requested, to the party for which intended at the following addresses (or at
such other addresses as shall be specified by the parties by like notice, except
that notices of change of address shall be effective only upon receipt):

 

(i)                                     If to Employer, at:

 

Hyperdynamics Corporation

Attn: Chairman of the Board of Directors

12012 Wickchester Lane

Suite 475

Houston, Texas 77079

 

(ii)                                  If to Executive, at Executive’s
then-current home address on file with Employer.

 

17.                                 Injunctive Relief.  Executive acknowledges
and agrees that Employer would not have an adequate remedy at law and would be
irreparably harmed in the event that any of the provisions of Paragraphs 8, 9,
and 10 were not performed in accordance with their specific terms or were
otherwise breached.  Accordingly, Executive agrees that Employer shall be
entitled to equitable relief, including preliminary and permanent injunctions
and specific performance, in the event Executive breaches or threatens to breach
any of the provisions of such Paragraphs, without the necessity of posting any
bond or proving special damages or irreparable injury.  Such remedies shall not
be deemed to be the exclusive remedies for a breach or threatened breach of this
Agreement by Executive, but shall be in addition to all other remedies available
to Employer at law or equity.

 

18.                                 Mitigation.  Executive shall not be required
to mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in this Agreement be reduced by any compensation earned by Executive as the
result of employment by another employer after the date of termination of
Executive’s employment with Employer, or otherwise.

 

19.                                Binding Effect; No Assignment by Executive;
No Third Party Benefit.  This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, legal representatives,
successors, and assigns; provided, however, that Executive shall not assign or
otherwise transfer this Agreement or any of his rights or obligations under this
Agreement.  Subject to Paragraph 20, Employer is authorized to assign or
otherwise transfer this Agreement or any of its rights or obligations under this
Agreement only to an

 

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Affiliate of Employer.  Executive shall not have any right to pledge,
hypothecate, anticipate, or in any way create a lien upon any payments or other
benefits provided under this Agreement; and no benefits payable under this
Agreement shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or pursuant to the laws
of descent and distribution.  Nothing in this Agreement, express or implied, is
intended to or shall confer upon any person other than the parties, and their
respective heirs, legal representatives, successors, and permitted assigns, any
rights, benefits, or remedies of any nature whatsoever under or by reason of
this Agreement.

 

20.                                 Assumption by Successor.  Employer shall
ensure that any successor or assignee (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all the business
and/or assets of Employer or the oil and gas acquisition, exploration,
development and production business of Employer, either by operation of law or
written agreement, assumes the obligations of this Agreement (the “Assumption
Obligation”).  If Employer fails to fulfill the Assumption Obligation, such
failure shall be considered a material breach of this Agreement for purposes of
Paragraph 1(h)(iv); provided, however, that the compensation to which Executive
would be entitled pursuant to Paragraph 7 upon a termination for Good Reason
shall be the sole remedy of Executive for any failure by Employer to fulfill the
Assumption Obligation.  As used in this Agreement, “Employer” shall include any
successor or assignee (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all the business and/or
assets of Employer or the oil and gas exploration, development and production
business of Employer that executes and delivers the agreement provided for in
this Paragraph 20 or that otherwise becomes obligated under this Agreement by
operation of law.

 

21.                                 Legal Fees and Expenses.  Employer will pay
or reimburse Executive for all reasonable legal fees and expenses up to
$10,000.00 incurred by Executive in connection with the preparation, review, and
negotiation of this Agreement prior to its execution, provided that any such
payment or reimbursement shall be made within the same calendar year in which
falls the Effective Date.

 

22.                                 Governing Law.  This Agreement and the
employment of Executive, as well as any arbitration proceedings hereunder, shall
be governed by the laws of the State of Texas except for its laws with respect
to conflict of laws

 

23.                                 Entire Agreement.  This Agreement contains
the entire agreement between the parties concerning the subject matter expressly
addressed herein and supersedes all prior agreements and understandings, written
and oral, between the parties with respect to such subject matter.  However,
nothing in this Paragraph 24 is intended to limit any obligations of the parties
under any other agreement that Employer may enter into with Executive after the
earlier of the Effective Date or the execution of this Agreement by Executive. 
The provisions of this Agreement which provide for accelerated vesting and
extended exercisability of stock options shall constitute amendments to any
stock option agreements previously or hereafter entered into between Executive
and Employer.

 

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24.                                 Modification; Waiver.  No person, other than
pursuant to a resolution duly adopted by the members of the Board, shall have
authority on behalf of Employer to agree to modify, amend, or waive any
provision of this Agreement.  Further, this Agreement may not be changed orally,
but only by a written agreement signed by the party against whom any waiver,
change, amendment, modification or discharge is sought to be enforced.  Each
party acknowledges and agrees that no breach by the other party of this
Agreement or failure to enforce or insist on its rights under this Agreement
shall constitute a waiver or abandonment of any such rights or defense to
enforcement of such rights.

 

25.                                 Construction.  This Agreement is to be
construed as a whole, according to its fair meaning, and not strictly for or
against any of the parties.

 

26.                                 Severability.  If any provision of this
Agreement shall be determined by a court to be invalid or unenforceable, the
remaining provisions of this Agreement shall not be affected thereby, shall
remain in full force and effect, and shall be enforceable to the fullest extent
permitted by applicable law.

 

27.                                 Counterparts.  This Agreement may be
executed by the parties in any number of counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
agreement.

 

28.                                 ARBITRATION.  ALL DISPUTES RELATING TO OR
ARISING OUT OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE SCOPE AND
INTERPRETATION OF THIS ARBITRATION CLAUSE AND THE JURISDICTION OF THE
ARBITRATOR, SHALL BE RESOLVED BY ARBITRATION USING THREE ARBITRATORS FOLLOWING
THE RULES OF ARBITRATION OF THE AMERICAN ARBITRATION ASSOCIATION.  ALL COSTS OF
THE ARBITRATION SHALL BE PAID BY EMPLOYER.  THE ARBITRATION PANEL SHALL BE
SELECTED AS FOLLOWS:  THE EMPLOYER SHALL SELECT ONE ARBITRATOR, THE EXECUTIVE
SHALL SELECT ONE ARBITRATOR, AND THE TWO ARBITRATORS THUS SELECTED SHALL SELECT
THE THIRD ARBITRATOR.  THE ARBITRATOR SHALL HAVE THE DISCRETION TO MODIFY THE
ARBITRATION PROVISIONS OF THIS AGREEMENT TO THE EXTENT NECESSARY TO AVOID A
FINDING THAT SUCH ARBITRATION PROVISIONS ARE UNCONSCIONABLE OR UNENFORCEABLE. 
SUCH ARBITRATION SHALL BE THE SOLE AND EXCLUSIVE REMEDY FOR ALL SUCH DISPUTES
AND CONTROVERSIES RELATING TO OR ARISING OUT OF THIS AGREEMENT.  THE DECISION OF
THE ARBITRATOR SHALL BE FINAL AND BINDING WITH REGARD TO EACH PARTY TO THE
ARBITRATION.

 

IN WITNESS WHEREOF, Employer has caused this Agreement to be executed on its
behalf by its duly authorized officer, and Executive has executed this
Agreement, effective as of the date first set forth above.

 

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EMPLOYER

 

EXECUTIVE

 

 

 

 

 

 

HYPERDYNAMICS CORPORATION

 

 

 

 

 

 

 

 

By:

 

 

By:

 

 

Robert A. Solberg

 

 

Ray Leonard

 

Chairman of the Board of Directors

 

 

President and Chief Executive Officer

 

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