INVESTMENT AGREEMENT
INVESTMENT  AGREEMENT  (this  "AGREEMENT"),  dated  as of August 12, 2005 by and
between  Hyperdynamics  Corporation, a Delaware corporation (the "Company"), and
Dutchess  Private  Equities  Fund,  II,  LP, a Delaware limited partnership (the
"Investor").
Whereas,  the  parties desire that, upon the terms and subject to the conditions
contained  herein,  the  Investor  shall  invest  up  to  Twenty Million dollars
($20,000,000)  to purchase the Company's Common Stock, $.001 par value per share
(the  "Common  Stock");
Whereas,  such  investments  will  be  made  in  reliance upon the provisions of
Section 4(2) under the Securities Act of 1933, as amended (the "1933 Act"), Rule
506  of  Regulation  D,  and  the  rules and regulations promulgated thereunder,
and/or  upon such other exemption from the registration requirements of the 1933
Act  as may be available with respect to any or all of the investments in Common
Stock  to  be  made  hereunder;  and
Whereas,  contemporaneously  with  the execution and delivery of this Agreement,
the  parties hereto are executing and delivering a Registration Rights Agreement
substantially  in  the  form  attached hereto (as amended from time to time, the
"Registration  Rights  Agreement")  pursuant  to which the Company has agreed to
provide  certain  registration  rights  under  the  1933  Act, and the rules and
regulations  promulgated  thereunder,  and  applicable  state  securities  laws.
NOW  THEREFORE,  in  consideration  of  the  foregoing  recitals, which shall be
considered  an integral part of this Agreement, the covenants and agreements set
forth  hereafter,  and  other  good  and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree  as  follows:
SECTION  1.  DEFINITIONS.
     As  used  in  this  Agreement, the following terms shall have the following
meanings  specified  or  indicated  below,  and  such  meanings shall be equally
applicable  to  the  singular  and  plural  forms  of  such  defined  terms.

     "1933  Act"  shall  have  the  meaning  set  forth  in the preamble of this
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agreement.
      -

     "1934  Act"  shall  mean  the Securities Exchange Act of 1934, as it may be
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amended.

     "Affiliate"  shall  have  the  meaning  specified  in  Section 5(h), below.
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     "Agreement"  shall  mean  this  Investment  Agreement.
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"Best  Bid"  shall  mean  the  highest  posted  bid  price  of the Common Stock.
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     "Buy  In"  shall  have  the  meaning  specified  in  Section  6,  below.
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     "Buy  In  Adjustment Amount" shall have the meaning specified in Section 6.
      --------------------------

"By-laws"  shall  have  the  meaning  specified  in  Section  4(c).
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     "Certificate  of Incorporation" shall have the meaning specified in Section
     ===========================================================================
4(c).
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     "Closing"  shall  have  the  meaning  specified  in  Section  2(h).
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     "Closing Date" shall mean no more than seven (7) Trading Days following the
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Put  Notice  Date.

"Common  Stock"  shall  have  the  meaning  set  forth  in  the preamble of this
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Agreement.
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     "Control"  or  "Controls" shall have the meaning specified in Section 5(h).
      -------        --------

     "Covering  Shares"  shall  have  the  meaning  specified  in  Section  6.
      ----------------

     "Effective  Date"  shall mean the date the SEC declares effective under the
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1933  Act  the  Registration  Statement  covering  the  Securities.

     "Environmental  Laws"  shall  have  the  meaning specified in Section 4(m).
      -------------------

     "Execution  Date"  shall  mean  the  date indicated in the preamble to this
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Agreement.

     "Indemnities"  shall  have  the  meaning  specified  in  Section  11.
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     "Indemnified  Liabilities"  shall have the meaning specified in Section 11.
      ------------------------

     "Ineffective  Period"  shall  mean any period of time that the Registration
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Statement  or  any  Supplemental  Registration  Statement  (as  defined  in  the
Registration  Rights  Agreement)  becomes ineffective or unavailable for use for
the  sale  or resale, as applicable, of any or all of the Registrable Securities
(as  defined  in  the  Registration  Rights Agreement) for any reason (or in the
event  the  prospectus under either of the above is not current and deliverable)
during  any  time  period  required  under  the  Registration  Rights Agreement.

     "Investor"  shall  have  the  meaning  indicated  in  the  preamble of this
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Agreement.
      -

     "Material Adverse Effect" shall have the meaning specified in Section 4(a).
      -----------------------

     "Maximum Common Stock Issuance" shall have the meaning specified in Section
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2(I).

     "Minimum  Acceptable  Price" with respect to any Put Notice Date shall mean
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seventy-five  percent  (75%)  of  the lowest closing bid prices for the ten (10)
Trading  Day  period  immediately  preceding  such  Put  Notice  Date.

     "Open  Period" shall mean the period beginning on and including the Trading
      ------------
Day  immediately following the Effective Date and ending on the earlier to occur
of (I) the date which is thirty-six (36) months from the Effective Date; or (II)
termination  of  the  Agreement  in  accordance  with  Section  9,  below.

     "Pricing Period" shall mean the period beginning on the Put Notice Date and
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ending  on  and  including the date that is five (5) Trading Days after such Put
Notice  Date.

     "Principal  Market"  shall  mean  the  American  Stock  Exchange, Inc., the
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National  Association  of  Securities  Dealers,  Inc.  Over-the-Counter Bulletin
Board,  the  NASDAQ  National  Market  System  or  the  NASDAQ  SmallCap Market,
whichever  is  the  principal  market  on  which  the  Common  Stock  is listed.

"Prospectus"  shall mean the prospectus, preliminary prospectus and supplemental
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prospectus  used  in  connection  with  the  Registration  Statement.

     "Purchase Amount" shall mean the total amount being paid by the Investor on
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a  particular  Closing  Date  to  purchase  the  Securities.

     "Purchase Price" shall mean ninety-five percent (95%) of the lowest closing
      --------------
Best  Bid  price  of  the  Common  Stock  during  the  Pricing  Period.

"Put"  shall  have  the  meaning  set  forth  in  Section  2(b)(1)  hereof.
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     "Put  Amount"  shall  have  the  meaning  set forth in Section 2(b) hereof.
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     "Put  Notice"  shall  mean  a  written  notice  sent to the Investor by the
      -----------
Company  stating  the Put Amount in U.S. dollars, the Company intends to sell to
the  Investor  pursuant  to  the  terms of the Agreement and stating the current
number  of  Shares  issued  and  outstanding  on  such  date.

     "Put  Notice Date" shall mean the Trading Day immediately following the day
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on  which  the  Investor  receives  a  Put Notice, however a Put Notice shall be
deemed delivered on (A) the Trading Day it is received by facsimile or otherwise
by the Investor if such notice is received prior to 9:00 am Eastern Time, or (B)
the  immediately  succeeding  Trading  Day  if  it  is  received by facsimile or
otherwise  after  9:00  am  Eastern Time on a Trading Day.  No Put Notice may be
deemed  delivered  on  a  day  that  is  not  a  Trading  Day.

     "Put  Restriction" shall mean the days between the beginning of the Pricing
      ----------------
Period and Closing Date.  During this time, the Company shall not be entitled to
deliver  another  Put  Notice.

     "Registration  Period"  shall  have  the meaning specified in Section 5(c),
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below.

     "Registration  Rights  Agreement"  shall  have the meaning set forth in the
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recitals,  above.

     "Registration  Statement"  means  the registration statement of the Company
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filed  under  the  1933  Act  covering  the  Common  Stock  issuable  hereunder.

     "Related  Party"  shall  have  the  meaning  specified  in  Section  5(h).
      --------------

     "Resolution"  shall  have  the  meaning  specified  in  Section  8(e).
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     "SEC"  shall  mean  the  U.S.  Securities  &  Exchange  Commission.
      ---

     "SEC  Documents"  shall  have  the  meaning  specified  in  Section  4(f).
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     "Securities"  shall  mean the shares of Common Stock issued pursuant to the
      ----------
terms  of  the  Agreement.

     "Shares"  shall  mean  the  shares  of  the  Company's  Common  Stock.
      ------

     "Sold  Shares"  shall  have  the  meaning  specified  in  Section  6.
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     "Subsidiaries"  shall  have  the  meaning  specified  in  Section  4(a).
      ------------

     "Trading  Day"  shall  mean  any  day on which the Principal Market for the
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Common  Stock  is  open  for  trading,  from the hours of 9:30 am until 4:00 pm.

"Transaction  Documents"  shall  mean  this  Agreement,  the Registration Rights
 ----------------------
Agreement,  and  each of the other agreements entered into by the parties hereto
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in  connection  with  this  Agreement.
SECTION  2.  PURCHASE  AND  SALE  OF  COMMON  STOCK.
(A)  PURCHASE  AND SALE OF COMMON STOCK. Subject to the terms and conditions set
forth herein, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company, up to that number of Shares having an aggregate
Purchase  Price  of  Twenty  Million  dollars  ($20,000,000).
(B)  DELIVERY  OF  PUT  NOTICES.
(I)  Subject  to the terms and conditions of the Transaction Documents, and from
time  to  time  during the Open Period, the Company may, in its sole discretion,
deliver  a Put Notice to the Investor which states the dollar amount (designated
in  U.S.  Dollars)  (the "Put Amount") ,which the Company intends to sell to the
Investor  on  a  Closing  Date  (the "Put"). The Put Notice shall be in the form
attached  hereto  as  Exhibit C and incorporated herein by reference. The amount
that  the  Company  shall  be entitled to Put to the Investor (the "Put Amount")
shall  be  equal  to, at the Company's election, either: (A) Two Hundred percent
(200%)  of  the  average daily volume (U.S. market only) of the Common Stock for
the twenty (20) Trading Days prior to the applicable Put Notice Date, multiplied
by  the  average of the three (3) daily closing bid prices immediately preceding
the  Put  Date, or (B) Five Hundred Thousand dollars ($500,000). During the Open
Period, the Company shall not be entitled to submit a Put Notice until after the
previous  Closing  has  been  completed. The Purchase Price for the Common Stock
identified  in the Put Notice shall be equal to ninety-five percent (95)% of the
lowest  closing  Best  Bid  price of the Common Stock during the Pricing Period.
 (C)  RESERVED
 (D)  INVESTOR'S  OBLIGATION  TO  PURCHASE SHARES. Subject to the conditions set
forth in this Agreement, following the Investor's receipt of a validly delivered
Put  Notice,  the Investor shall be required to purchase from the Company during
the  related  Pricing  Period that number of Shares having an aggregate Purchase
Price equal to the lesser of (i) the Put Amount set forth in the Put Notice, and
(ii)  twenty  percent  (20%) of the aggregate trading volume of the Common Stock
during  the  applicable Pricing Period times (x) the lowest closing bid price of
the Company's Common Stock during the specified Pricing Period, but only if said
Shares  bear  no  restrictive  legend,  are  not  subject  to  stop  transfer
instructions,  pursuant  to  Section 2(h), prior to the applicable Closing Date.
(E)  Reserved
(F)  CONDITIONS  TO  INVESTOR'S  OBLIGATION  TO PURCHASE SHARES. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be entitled to
deliver  a  Put  Notice  and the Investor shall not be obligated to purchase any
Shares  at  a  Closing (as defined in Section 2(h)) unless each of the following
conditions  are  satisfied:
(I) a Registration Statement shall have been declared effective and shall remain
effective  and  available  for  the resale of all the Registrable Securities (as
defined  in  the  Registration  Rights Agreement) at all times until the Closing
with  respect  to  the  subject  Put  Notice;
(II) at all times during the period beginning on the related Put Notice Date and
ending  on  and  including the related Closing Date, the Common Stock shall have
been  listed  on  the  Principal  Market  and shall not have been suspended from
trading thereon for a period of two (2) consecutive Trading Days during the Open
Period and the Company shall not have been notified of any pending or threatened
proceeding  or  other  action  to  suspend  the  trading  of  the  Common Stock;
(III)  the  Company  has  complied  with its obligations and is otherwise not in
breach  of  a  material  provision  of, or in default under, this Agreement, the
Registration  Rights  Agreement  or  any  other agreement executed in connection
herewith  which has not been corrected prior to delivery of the Put Notice Date;
(IV)  no  injunction  shall  have  been  issued  and  remain in force, or action
commenced  by  a  governmental authority which has not been stayed or abandoned,
prohibiting  the  purchase  or  the  issuance  of  the  Securities;  and
(V)  the  issuance  of  the Securities will not violate any shareholder approval
requirements  of  the  Principal  Market.
If  any of the events described in clauses (i) through (v) above occurs during a
Pricing  Period,  then the Investor shall have no obligation to purchase the Put
Amount  of  Common  Stock  set  forth  in  the  applicable  Put  Notice.
(G)  RESERVED
(H)  MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to the satisfaction of
the  conditions set forth in Sections 2(f), 7 and 8, the closing of the purchase
by  the  Investor  of  Shares  (a "Closing") shall occur on the date which is no
later than seven (7) Trading Days following the applicable Put Notice Date (each
a  "Closing Date"). Prior to each Closing Date, (I) the Company shall deliver to
the Investor pursuant to this Agreement, certificates representing the Shares to
be  issued  to  the  Investor  on  such  date  and registered in the name of the
Investor;  and (II) the Investor shall deliver to the Company the Purchase Price
to  be  paid for such Shares, determined as set forth in Sections 2(b) and 2(d).
In  lieu  of  delivering  physical  certificates representing the Securities and
provided  that  the  Company's  transfer  agent  then  is  participating  in The
Depository  Trust  Company  ("DTC")  Fast Automated Securities Transfer ("FAST")
program,  upon  request  of the Investor, the Company shall use its commercially
reasonable  efforts  to  cause its transfer agent to electronically transmit the
Securities  by crediting the account of the Investor's prime broker (which shall
be  specified  by the Investor a reasonably sufficient time in advance) with DTC
through  its  Deposit  Withdrawal  Agent  Commission  ("DWAC")  system.
The  Company  understands  that a delay in the issuance of Securities beyond the
Closing  Date could result in economic loss to the Investor. After the Effective
Date,  as  compensation to the Investor for such loss, the Company agrees to pay
late  payments  to  the  Investor  for  late issuance of Securities (delivery of
Securities  after  the applicable Closing Date) in accordance with the following
schedule  (where  "No.  of  Days  Late" is defined as the number of trading days
beyond  the  Closing  Date.  The  Amounts  are  cumulative.):


LATE  PAYMENT  FOR  EACH
NO.  OF  DAYS  LATE               $10,000  OF  COMMON  STOCK

          1                                           $100
          2                                           $200
          3                                           $300
          4                                           $400
          5                                           $500
          6                                           $600
          7                                           $700
          8                                           $800
          9                                           $900
          10                                        $1,000
          Over  10                             $1,000  +  $200  for  each
                                                      Business  Day  late
beyond  10  days

The  Company  shall  pay any payments incurred under this Section in immediately
available  funds  upon  demand  by  the Investor. Nothing herein shall limit the
Investor's right to pursue actual damages for the Company's failure to issue and
deliver  the  Securities  to  the  Investor, except to the extent that such late
payments shall constitute payment for and offset any such actual damages alleged
by  the  Investor,  and  any  Buy  In  Adjustment  Amount.
 (I)  OVERALL LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything contained
herein  to the contrary, if during the Open Period the Company becomes listed on
an  exchange that limits the number of shares of Common Stock that may be issued
without  shareholder approval, then the number of Shares issuable by the Company
and  purchasable  by the Investor, including the shares of Common Stock issuable
to  the  Investors,  shall  not exceed that number of the shares of Common Stock
that  may  be  issuable  without  shareholder  approval,  subject to appropriate
adjustment  for  stock  splits,  stock  dividends, combinations or other similar
recapitalization  affecting  the  Common  Stock  (the  "Maximum  Common  Stock
Issuance"),  in  excess  of  the  Maximum  Common  Stock Issuance shall first be
approved by the Company's shareholders in accordance with applicable law and the
By-laws and Amended and Restated Certificate of Incorporation of the Company, if
such issuance of shares of Common Stock could cause a delisting on the Principal
Market.  The  parties understand and agree that the Company's failure to seek or
obtain  such  shareholder approval shall in no way adversely affect the validity
and  due  authorization of the issuance and sale of Securities or the Investor's
obligation  in  accordance  with  the  terms and conditions hereof to purchase a
number  of  Shares  in  the  aggregate  up  to the Maximum Common Stock Issuance
limitation,  and  that  such  approval pertains only to the applicability of the
Maximum  Common  Stock  Issuance  limitation  provided  in  this  Section  2(I).
SECTION  3.  INVESTOR'S  REPRESENTATIONS,  WARRANTIES  AND  COVENANTS.
The  Investor  represents  and  warrants  to  the  Company, and covenants, that:
(A)  SOPHISTICATED  INVESTOR.  The  Investor  has, by reason of its business and
financial experience, such knowledge, sophistication and experience in financial
and  business matters and in making investment decisions of this type that it is
capable  of  (I)  evaluating  the  merits  and  risks  of  an  investment in the
Securities  and  making an informed investment decision; (II) protecting its own
interest;  and  (III)  bearing  the  economic  risk  of  such  investment for an
indefinite  period  of  time.
(B)  AUTHORIZATION;  ENFORCEMENT.  This  Agreement  has  been  duly  and validly
authorized,  executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to  applicable  bankruptcy,  insolvency, reorganization, moratorium, liquidation
and  other  similar laws relating to, or affecting generally, the enforcement of
applicable  creditors'  rights  and  remedies.
(C)  SECTION  9 OF THE 1934 ACT. During the term of this Agreement, the Investor
will  comply  with  the  provisions  of Section 9 of the 1934 Act, and the rules
promulgated thereunder, with respect to transactions involving the Common Stock.
The  Investor  agrees  not  to  short, either directly or indirectly through its
affiliates,  principals  or advisors, the Company's common stock during the term
of  this  Agreement.
(D)  ACCREDITED  INVESTOR.  Investor is an "Accredited Investor" as that term is
defined  in  Rule  501(a)(3)  of  Regulation  D  of  the  1933  Act.
(E)  NO  CONFLICTS.  The  execution, delivery and performance of the Transaction
Documents  by  the  Investor  and  the  consummation  by  the  Investor  of  the
transactions  contemplated  hereby and thereby will not result in a violation of
Partnership  Agreement  or  other  organizational  documents  of  the  Investor.
(F)  OPPORTUNITY TO DISCUSS. The Investor has received all materials relating to
the  Company's  business,  finance  and  operations  which it has requested. The
Investor  has  had  an  opportunity  to  discuss  the  business,  management and
financial  affairs  of  the  Company  with  the  Company's  management.
(G)  INVESTMENT  PURPOSES. The Investor is purchasing the Securities for its own
account  for  investment  purposes  and not with a view towards distribution and
agrees  to  resell  or  otherwise dispose of the Securities solely in accordance
with  the  registration  provisions of the 1933 Act (or pursuant to an exemption
from  such  registration  provisions).
(H) NO REGISTRATION AS A DEALER. The Investor is not and will not be required to
be  registered  as  a  "dealer"  under  the  1934 Act, either as a result of its
execution  and performance of its obligations under this Agreement or otherwise.
(I)  GOOD  STANDING  The  Investor  is  a  Limited  Partnership, duly organized,
validly  existing  and  in  good  standing  in  the  State  of  Delaware.
(J)  TAX  LIABILITIES.  The  Investor  understands that it is liable for its own
tax  liabilities.
(K)  REGULATION  M.  The  Investor  will comply with Regulation M under the 1934
Act,  if  applicable.
SECTION  4.  REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.
Except  as  set  forth  in the Schedules attached hereto, or as disclosed on the
Company's  SEC  Documents,  the  Company represents and warrants to the Investor
that:
(A)  ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized
and  validly  existing in good standing under the laws of the State of Delaware,
and  has  the  requisite corporate power and authorization to own its properties
and  to  carry  on its business as now being conducted. Both the Company and the
companies  it  owns  or  controls,  its "Subsidiaries," are duly qualified to do
business  and  are in good standing in every jurisdiction in which its ownership
of  property  or  the  nature  of  the  business  conducted  by  it  makes  such
qualification  necessary,  except  to  the  extent  that  the  failure  to be so
qualified  or  be  in good standing would not have a Material Adverse Effect. As
used  in  this  Agreement,  "Material Adverse Effect" means any material adverse
effect  on  the business, properties, assets, operations, results of operations,
financial  condition  or  prospects of the Company and its Subsidiaries, if any,
taken  as  a  whole,  or  on  the  transactions  contemplated  hereby  or by the
agreements  and instruments to be entered into in connection herewith, or on the
authority  or  ability  of  the  Company  to  perform  its obligations under the
Transaction  Documents  (as  defined  in  Section  1  and  4(b),  below).
(B)  AUTHORIZATION;  ENFORCEMENT;  COMPLIANCE  WITH  OTHER  INSTRUMENTS.
(I)  The  Company  has the requisite corporate power and authority to enter into
and  perform  this Agreement, the Registration Rights Agreement, and each of the
other  agreements  entered  into  by  the  parties hereto in connection with the
transactions  contemplated  by  this  Agreement  (collectively, the "Transaction
Documents"), and to issue the Securities in accordance with the terms hereof and
thereof.
(II)  The execution and delivery of the Transaction Documents by the Company and
the  consummation  by  it,  of the transactions contemplated hereby and thereby,
including  without  limitation  the reservation for issuance and the issuance of
the Securities pursuant to this Agreement, have been duly and validly authorized
by  the  Company's Board of Directors and no further consent or authorization is
required  by  the  Company,  its  Board  of  Directors,  or  its  shareholders.
(III)  The  Transaction  Documents  have  been  duly  and  validly  executed and
delivered  by  the  Company.
(IV)  The  Transaction Documents constitute the valid and binding obligations of
the  Company  enforceable  against  the  Company in accordance with their terms,
except  as such enforceability may be limited by general principles of equity or
applicable  bankruptcy,  insolvency,  reorganization, moratorium, liquidation or
similar  laws relating to, or affecting generally, the enforcement of creditors'
rights  and  remedies.
(C)  CAPITALIZATION.  As of the date hereof, the authorized capital stock of the
Company  consists  of  (i) 250,000,000 authorized shares of Common Stock, $0.001
par  value  per  share,  of  which  as of the date hereof, 42,059,683 shares are
issued  and outstanding; 20,000,000 shares of Preferred Stock authorized, $0.001
par  value  per share of which Series A 1,945 shares are issued and outstanding,
Series  B 2,725 shares are issued and outstanding; (as of March 31, 2005) shares
reserved  for  issuance  pursuant  to  options,  warrants  and other convertible
securities.  All of such outstanding shares have been, or upon issuance will be,
validly  issued and are fully paid and nonassessable. Except as disclosed in the
Company's  publicly  available  filings  with  Periodic  Filings,
 (I)  no  shares of the Company's capital stock are subject to preemptive rights
or  any  other similar rights or any liens or encumbrances suffered or permitted
by  the  Company; (II) there are no outstanding debt securities; (III) there are
no  outstanding  shares  of  capital  stock, options, warrants, scrip, rights to
subscribe  to,  calls or commitments of any character whatsoever relating to, or
securities  or  rights  convertible  into,  any  shares  of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements  by  which  the Company or any of its Subsidiaries is or may become
bound  to  issue additional shares of capital stock of the Company or any of its
Subsidiaries  or  options,  warrants,  scrip,  rights  to subscribe to, calls or
commitments  of  any  character  whatsoever relating to, or securities or rights
convertible  into,  any  shares  of  capital  stock of the Company or any of its
Subsidiaries;  (IV)  there  are  no  agreements  or arrangements under which the
Company  or  any of its Subsidiaries is obligated to register the sale of any of
their  securities under the 1933 Act (except the Registration Rights Agreement),
(V)  there  are  no  outstanding  securities  of  the  Company  or  any  of  its
Subsidiaries  which  contain any redemption or similar provisions, and there are
no  contracts,  commitments, understandings or arrangements by which the Company
or  any  of  its Subsidiaries is or may become bound to redeem a security of the
Company  or any of its Subsidiaries; (VI) there are no securities or instruments
containing  anti-dilution  or  similar  provisions that will be triggered by the
issuance  of  the  Securities  as described in this Agreement; (VII) the Company
does  not  have  any  stock  appreciation  rights  or  "phantom  stock" plans or
agreements  or  any similar plan or agreement; and (VIII) there is no dispute as
to  the classification of any shares of the Company's capital stock. The Company
has  furnished to the Investor, or the Investor has had access through EDGAR to,
true  and  correct  copies  of the Company's Amended and Restated Certificate of
Incorporation,  as  in  effect  on  the  date  hereof  (the  "Certificate  of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"),  and the terms of all securities convertible into or exercisable for
Common  Stock and the material rights of the holders thereof in respect thereto.
(D)  ISSUANCE  OF SHARES. The Company has reserved 6,400,000 Shares for issuance
pursuant  to  this  Agreement has been duly authorized and reserved for issuance
(subject  to  adjustment pursuant to the Company's covenant set forth in Section
5(f)  below)  pursuant  to this Agreement. Upon issuance in accordance with this
Agreement,  the Securities will be validly issued, fully paid and non-assessable
and free from all taxes, liens and charges with respect to the issue thereof. In
the event the Company cannot register a sufficient number of Shares for issuance
pursuant  to  this Agreement, the Company will use its best efforts to authorize
and  reserve  for  issuance  the  number  of  Shares required for the Company to
perform  its  obligations  hereunder  as  soon  as  reasonably  practicable.
(E)  NO  CONFLICTS.  The  execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated  hereby  and  thereby  will  not  (I)  result in a violation of the
Certificate  of  Incorporation, any Certificate of Designations, Preferences and
Rights  of  any  outstanding  series  of  preferred  stock of the Company or the
By-laws;  or  (II)  conflict with, or constitute a material default (or an event
which  with  notice  or  lapse  of time or both would become a material default)
under,  or  give to others any rights of termination, amendment, acceleration or
cancellation  of,  any  material  agreement,  contract,  indenture  mortgage,
indebtedness  or instrument to which the Company or any of its Subsidiaries is a
party,  or  to  the  Company's knowledge result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities  laws  and regulations and the rules and regulations of the Principal
Market  or  principal  securities exchange or trading market on which the Common
Stock  is traded or listed) applicable to the Company or any of its Subsidiaries
or  by  which any property or asset of the Company or any of its Subsidiaries is
bound or affected. Except as disclosed in Schedule 4(e), neither the Company nor
its  Subsidiaries  is  in  violation  of  any  term of, or in default under, the
Certificate  of  Incorporation, any Certificate of Designations, Preferences and
Rights  of  any  outstanding  series  of  preferred  stock of the Company or the
By-laws  or  their  organizational  charter  or  by-laws,  respectively,  or any
contract,  agreement,  mortgage,  indebtedness, indenture, instrument, judgment,
decree  or order or any statute, rule or regulation applicable to the Company or
its  Subsidiaries,  except  for  possible  conflicts,  defaults,  terminations,
amendments,  accelerations,  cancellations  and  violations  that  would  not
individually or in the aggregate have a Material Adverse Effect. The business of
the  Company  and  its  Subsidiaries  is  not  being conducted, and shall not be
conducted,  in  violation  of  any  law,  statute,  ordinance,  rule,  order  or
regulation  of  any  governmental  authority  or  agency,  regulatory  or
self-regulatory  agency,  or court, except for possible violations the sanctions
for  which  either  individually  or  in the aggregate would not have a Material
Adverse  Effect.  Except  as  specifically contemplated by this Agreement and as
required  under  the  1933  Act  or  any  securities  laws  of any states to the
Company's  knowledge,  the  Company  is  not  required  to  obtain  any consent,
authorization,  permit  or  order of, or make any filing or registration (except
the  filing of a registration statement) with, any court, governmental authority
or  agency,  regulatory  or self-regulatory agency or other third party in order
for  it  to  execute,  deliver  or  perform  any  of  its  obligations under, or
contemplated  by,  the Transaction Documents in accordance with the terms hereof
or  thereof.  All  consents,  authorizations,  permits,  orders,  filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have  been obtained or effected on or prior to the date hereof and are
in  full force and effect as of the date hereof. Except as disclosed in Schedule
4(e), the Company and its Subsidiaries are unaware of any facts or circumstances
which  might give rise to any of the foregoing. The Company is not, and will not
be,  in  violation  of  the  listing  requirements of the Principal Market as in
effect  on  the date hereof and on each of the Closing Dates and is not aware of
any  facts  which  would reasonably lead to delisting of the Common Stock by the
Principal  Market  in  the  foreseeable  future.
(F)  SEC DOCUMENTS; FINANCIAL STATEMENTS. As of the date hereof, the Company has
filed  all reports, schedules, forms, statements and other documents required to
be  filed  by it with the SEC pursuant to the reporting requirements of the 1934
Act  (all  of  the  foregoing  filed  prior  to the date hereof and all exhibits
included  therein  and  financial statements and schedules thereto and documents
incorporated  by  reference  therein  being  hereinafter referred to as the "SEC
Documents").  The  Company has delivered to the Investor or its representatives,
or  they  have  had access through EDGAR to, true and complete copies of the SEC
Documents.  As  of  their  respective  dates,  the SEC Documents complied in all
material  respects  with  the  requirements  of  the  1934 Act and the rules and
regulations  of  the SEC promulgated thereunder applicable to the SEC Documents,
and  none  of  the  SEC  Documents,  at  the  time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact  required to be stated therein or necessary to make the statements therein,
in  light of the circumstances under which they were made, not misleading. As of
their  respective dates, the financial statements of the Company included in the
SEC  Documents  complied  as  to  form  in all material respects with applicable
accounting  requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally  accepted  accounting  principles,  by  a firm that is a member of the
Public  Companies  Accounting  Oversight  Board  ("PCAOB") consistently applied,
during  the  periods  involved (except (I) as may be otherwise indicated in such
financial  statements  or  the  notes  thereto, or (II) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position  of  the  Company  as  of  the  dates  thereof  and  the results of its
operations  and  cash  flows for the periods then ended (subject, in the case of
unaudited  statements,  to  normal year-end audit adjustments). No other written
information provided by or on behalf of the Company to the Investor which is not
included  in  the  SEC  Documents,  including,  without  limitation, information
referred  to in Section 4(d) of this Agreement, contains any untrue statement of
a  material  fact  or  omits  to  state  any material fact necessary to make the
statements  therein,  in  the  light of the circumstance under which they are or
were  made,  not  misleading. Neither the Company nor any of its Subsidiaries or
any of their officers, directors, employees or agents have provided the Investor
with  any material, nonpublic information which was not publicly disclosed prior
to  the  date  hereof  and  any  material, nonpublic information provided to the
Investor by the Company or its Subsidiaries or any of their officers, directors,
employees or agents prior to any Closing Date shall be publicly disclosed by the
Company  prior  to  such  Closing  Date.
(G)  ABSENCE  OF  CERTAIN CHANGES. Except as set forth in the SEC Documents, the
Company  does not intend to change the business operations of the Company in any
material way. The Company has not taken any steps, and does not currently expect
to  take  any  steps, to seek protection pursuant to any bankruptcy law nor does
the Company or its Subsidiaries have any knowledge or reason to believe that its
creditors  intend  to  initiate  involuntary  bankruptcy  proceedings.
(H) ABSENCE OF LITIGATION. Except as set forth in the SEC Documents, there is no
action,  suit,  proceeding,  inquiry  or  investigation  before or by any court,
public  board,  government  agency, self-regulatory organization or body pending
or,  to  the  knowledge  of  the  executive  officers  of  Company or any of its
Subsidiaries,  threatened  against or affecting the Company, the Common Stock or
any  of  the  Company's  Subsidiaries  or  any of the Company's or the Company's
Subsidiaries'  officers  or  directors  in their capacities as such, in which an
adverse  decision  could  have  a  Material Adverse Effect, except litigation in
connection  with USOil and and events unfolding in the Republic of Guinea elated
to  the  Production  Sharing  Agreement  between  Guinea  and  USOil.
(I)  ACKNOWLEDGMENT  REGARDING  INVESTOR'S  PURCHASE  OF  SHARES.  The  Company
acknowledges  and  agrees  that the Investor is acting solely in the capacity of
arm's  length  purchaser  with  respect  to  the  Transaction  Documents and the
transactions  contemplated  hereby and thereby. The Company further acknowledges
that  the  Investor  is  not  acting  as a financial advisor or fiduciary of the
Company  (or  in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby and any advice given by the
Investor  or  any of its respective representatives or agents in connection with
the  Transaction  Documents and the transactions contemplated hereby and thereby
is  merely  incidental to the Investor's purchase of the Securities. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company  and  its  representatives.
(J) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. Except as
set  forth  in  the  SEC  Documents, as of the date hereof, no event, liability,
development  or  circumstance  has  occurred  or  exists,  or  to  the Company's
knowledge  is  contemplated  to  occur,  with  respect  to  the  Company  or its
Subsidiaries  or  their  respective  business,  properties,  assets,  prospects,
operations or financial condition, that would be required to be disclosed by the
Company  under applicable securities laws on a registration statement filed with
the  SEC relating to an issuance and sale by the Company of its Common Stock and
which  has  not  been  publicly announced, except as to litigation in connection
with  USOil,  and  events  unfolding  in  the  Republic  of Guinea elated to the
Production  Sharing  Agreement  between  Guinea  and  USOil.
(K)  EMPLOYEE  RELATIONS.  Neither  the  Company  nor any of its Subsidiaries is
involved  in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened. Neither the Company nor any
of  its  Subsidiaries  is  a party to a collective bargaining agreement, and the
Company  and  its  Subsidiaries  believe that relations with their employees are
good.  No  executive  officer  (as  defined  in Rule 501(f) of the 1933 Act) has
notified  the Company that such officer intends to leave the Company's employ or
otherwise  terminate  such  officer's  employment  with  the  Company.
(L)  INTELLECTUAL  PROPERTY  RIGHTS.  The  Company  and  its Subsidiaries own or
possess  adequate rights or licenses to use all trademarks, trade names, service
marks,  service  mark  registrations,  service  names,  patents,  patent rights,
copyrights,  inventions, licenses, approvals, governmental authorizations, trade
secrets  and  rights  necessary  to  conduct  their respective businesses as now
conducted.  Except  as  set  forth  in  the SEC Documents, none of the Company's
trademarks,  trade  names,  service  marks,  service mark registrations, service
names,  patents,  patent  rights,  copyrights,  inventions, licenses, approvals,
government  authorizations,  trade secrets or other intellectual property rights
necessary  to  conduct  its  business as now or as proposed to be conducted have
expired  or  terminated,  or  are expected to expire or terminate within two (2)
years  from  the date of this Agreement. The Company and its Subsidiaries do not
have  any  knowledge  of  any infringement by the Company or its Subsidiaries of
trademark,  trade  name  rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade secret
or  other  similar  rights  of  others, or of any such development of similar or
identical  trade  secrets  or technical information by others and, except as set
forth  in  the SEC Documents, there is no claim, action or proceeding being made
or brought against, or to the Company's knowledge, being threatened against, the
Company  or  its  Subsidiaries  regarding trademark, trade name, patents, patent
rights,  invention,  copyright,  license,  service names, service marks, service
mark  registrations, trade secret or other infringement; and the Company and its
Subsidiaries  are unaware of any facts or circumstances which might give rise to
any  of  the foregoing. The Company and its Subsidiaries have taken commercially
reasonable  security  measures to protect the secrecy, confidentiality and value
of  all  of  their  intellectual  properties.
(M)  ENVIRONMENTAL  LAWS.  The  Company  and  its  Subsidiaries  (I) are, to the
knowledge  of  management  of  the  Company,  in  compliance  with  any  and all
applicable  foreign,  federal,  state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances  or  wastes,  pollutants or contaminants ("Environmental Laws"); (II)
have,  to  the  knowledge  of  management  of the Company, received all permits,
licenses or other approvals required of them under applicable Environmental Laws
to  conduct  their  respective  businesses;  and (III) are in compliance, to the
knowledge  of  the  Company,  with  all terms and conditions of any such permit,
license or approval where, in each of the three (3) foregoing cases, the failure
to  so  comply  would have, individually or in the aggregate, a Material Adverse
Effect.
(N)  TITLE.  The  Company and its Subsidiaries have good and marketable title to
all  personal  property  owned  by them which is material to the business of the
Company  and  its  Subsidiaries,  in  each  case  free  and  clear of all liens,
encumbrances  and  defects  except such as are described in the SEC Documents or
such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any
of  its  Subsidiaries.  Any real property and facilities held under lease by the
Company  or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with  the use made and proposed to be made of such property and buildings by the
Company  and  its  Subsidiaries.
(O)  INSURANCE.  Each  of  the Company's Subsidiaries are insured by insurers of
recognized  financial  responsibility  against such losses and risks and in such
amounts  as  management  of  the  Company  reasonably believes to be prudent and
customary  in  the  businesses  in  which  the  Company and its Subsidiaries are
engaged.  Neither  the  Company  nor  any  such  Subsidiary has been refused any
insurance  coverage  sought  or applied for and neither the Company nor any such
Subsidiary  has  any  reason  to  believe  that it will not be able to renew its
existing  insurance  coverage  as  and  when  such coverage expires or to obtain
similar  coverage  from  similar  insurers  as  may be necessary to continue its
business  at  a  cost  that  would  not  have  a  Material  Adverse  Effect.
(P)  REGULATORY PERMITS. The Company and its Subsidiaries have in full force and
effect  all  certificates,  approvals,  authorizations  and  permits  from  the
appropriate  federal,  state,  local  or  foreign  regulatory  authorities  and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective  properties  and  assets and conduct their respective businesses, and
neither  the  Company  nor  any  such  Subsidiary  has  received  any  notice of
proceedings  relating to the revocation or modification of any such certificate,
approval,  authorization  or  permit,  except  for such certificates, approvals,
authorizations  or  permits  which  if  not  obtained,  or  such  revocations or
modifications  which,  would  not  have  a  Material  Adverse  Effect.
(Q)  INTERNAL  ACCOUNTING  CONTROLS.  The  Company  and each of its Subsidiaries
maintain  a  system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurance  that  (I)  transactions  are  executed in accordance with
management's  general or specific authorizations; (II) transactions are recorded
as  necessary  to  permit preparation of financial statements in conformity with
generally  accepted accounting principles by a firm with membership to the PCAOB
and  to  maintain asset accountability; (III) access to assets is permitted only
in  accordance with management's general or specific authorization; and (IV) the
recorded  accountability  for  assets  is  compared  with the existing assets at
reasonable  intervals  and  appropriate  action  is  taken  with  respect to any
differences.
(R)  NO  MATERIALLY  ADVERSE  CONTRACTS, ETC. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any  judgment,  decree,  order,  rule or regulation which in the judgment of the
Company's  officers  has or is expected in the future to have a Material Adverse
Effect.  Neither  the  Company  nor  any  of  its Subsidiaries is a party to any
contract  or agreement which in the judgment of the Company's officers has or is
expected  to  have  a  Material  Adverse  Effect.
(S)  TAX  STATUS. The Company and each of its Subsidiaries has made or filed all
United  States  federal  and state income and all other tax returns, reports and
declarations  required  by  any  jurisdiction to which it is subject (unless and
only  to  the extent that the Company and each of its Subsidiaries has set aside
on  its  books  provisions reasonably adequate for the payment of all unpaid and
unreported  taxes) and has paid all taxes and other governmental assessments and
charges  that  are  material  in  amount,  shown or determined to be due on such
returns,  reports  and  declarations, except those being contested in good faith
and  has set aside on its books provision reasonably adequate for the payment of
all  taxes  for periods subsequent to the periods to which such returns, reports
or  declarations apply. There are no unpaid taxes in any material amount claimed
to  be  due by the taxing authority of any jurisdiction, and the officers of the
Company  know  of  no  basis  for  any  such  claim.
(T)  CERTAIN  TRANSACTIONS.  Except  as  set forth in the SEC Documents filed at
least  ten  (10)  days  prior  to  the  date  hereof and except for arm's length
transactions pursuant to which the Company makes payments in the ordinary course
of  business  upon  terms  no  less favorable than the Company could obtain from
third  parties  and  other  than the grant of stock options disclosed in the SEC
Documents,  none  of  the  officers,  directors,  or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other  than  for  services as employees, officers and directors), including any
contract,  agreement  or  other  arrangement  providing  for  the  furnishing of
services to or by, providing for rental of real or personal property to or from,
or  otherwise  requiring  payments  to  or  from  any  officer, director or such
employee  or,  to  the  knowledge  of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial  interest  or  is  an  officer,  director,  trustee  or  partner.
(U) DILUTIVE EFFECT. The Company understands and acknowledges that the number of
shares  of  Common Stock issuable upon purchases pursuant to this Agreement will
increase in certain circumstances including, but not necessarily limited to, the
circumstance  wherein  the trading price of the Common Stock declines during the
period  between the Effective Date and the end of the Open Period. The Company's
executive officers and directors have studied and fully understand the nature of
the  transactions  contemplated by this Agreement and recognize that they have a
potential  dilutive effect. The Board of Directors of the Company has concluded,
in its good faith business judgment, that such issuance is in the best interests
of  the  Company.  The  Company  specifically acknowledges that, subject to such
limitations  as  are  expressly  set  forth  in  the  Transaction Documents, its
obligation  to  issue  shares  of  Common  Stock upon purchases pursuant to this
Agreement  is  absolute and unconditional regardless of the dilutive effect that
such  issuance  may have on the ownership interests of other shareholders of the
Company.
(V)  RIGHT  OF  FIRST  REFUSAL.  The  Company shall not, directly or indirectly,
without  the  prior  written  consent of Investor which will not be unreasonably
withheld, offer, sell, grant any option to purchase, or otherwise dispose of (or
announce  any offer, sale, grant or any option to purchase or other disposition)
any  of  its Common Stock or securities convertible into Common Stock at a price
that  is  less than the market price of the Common Stock at the time of issuance
of  such  security  or investment (a "Subsequent Financing") for a period of one
(1)  year  after  the  Effective  Date,  except  (I)  the granting of options or
warrants,  or  shares to employees, officers, directors and consultants, and the
issuance of shares upon exercise of options granted, under any stock option plan
heretofore  or hereafter duly adopted by the Company or for services rendered or
to  be  rendered;  (II) shares issued upon exercise of any currently outstanding
warrants or options and upon conversion of any currently outstanding convertible
debenture  or  convertible  preferred  stock, in each case disclosed pursuant to
Section  4(c);  (III) securities issued in connection with the capitalization or
creation  of a joint venture with a strategic partner; (IV) shares issued to pay
part  or all of the purchase price for the acquisition by the Company of another
entity (which, for purposes of this clause (iv), shall not include an individual
or  group  of individuals); and (V) shares issued in a bona fide public offering
by  the Company of its securities, unless (A) the Company delivers to Investor a
written  notice  (the  "Subsequent Financing Notice") of its intention to effect
such  Subsequent  Financing, which Subsequent Financing Notice shall describe in
reasonable detail the proposed terms of such Subsequent Financing, the amount of
proceeds  intended to be raised thereunder, the person with whom such Subsequent
Financing  shall  be  effected,  and  attached to which shall be a term sheet or
similar  document relating thereto; and (B) Investor shall not have notified the
Company  by  5:00 p.m. (Eastern Time) on the fifth Trading Day after its receipt
of  the  Subsequent  Financing  Notice of its willingness to provide, subject to
completion  of  mutually  acceptable  documentation, financing to the Company on
substantially  the  terms  set forth in the Subsequent Financing Notice; (VI) to
enter  into  a  loan,  credit  or  lease  facility  with  a  bank  or  financing
institution.  If  Investor  shall fail to notify the Company of its intention to
enter  into  such  negotiations  within  such  time period, then the Company may
effect  the  Subsequent  Financing substantially upon the terms set forth in the
Subsequent  Financing  Notice;  provided that the Company shall provide Investor
with  a  second  Subsequent  Financing Notice, and Investor shall again have the
right  of  first  refusal  set  forth  above  in this Section, if the Subsequent
Financing subject to the initial Subsequent Financing Notice shall not have been
consummated  for  any reason on the terms set forth in such Subsequent Financing
Notice  within  thirty  Trading  Days  after  the date of the initial Subsequent
Financing Notice. The rights granted to Investor in this Section are not subject
to  any  prior  right  of  first  refusal given to any other person disclosed on
Schedule  4(c).
(W)  LOCK-UP.  The  Company  shall  cause its officers, insiders, directors, and
affiliates  or  other  related  parties under control of the Company, to refrain
from  selling  Common  Stock  during  each  Pricing  Period.
(X) NO GENERAL SOLICITATION. Neither the Company, nor any of its affiliates, nor
any person acting on its behalf, has engaged in any form of general solicitation
or  general  advertising (within the meaning of Regulation D) in connection with
the  offer  or  sale  of  the  Common  Stock  offered  hereby.
(Y)  NO BROKERS, FINDERS OR FINANCIAL ADVISORY FEES OR COMMISSIONS.  No brokers,
finders or financial advisory fees or commissions will be payable by the Company
with  respect  to  the  transactions  contemplated by this Agreement, other than
disclosed  in  this  Agreement.
SECTION  5.  COVENANTS  OF  THE  COMPANY
(A)  BEST  EFFORTS. The Company shall use commercially reasonable efforts timely
to satisfy each of the conditions to be satisfied by it as provided in Section 7
of  this  Agreement.
(B) BLUE SKY. The Company shall, at its sole cost and expense, on or before each
of the Closing Dates, take such action as the Company shall reasonably determine
is  necessary  to  qualify  the  Securities  for,  or  obtain  exemption for the
Securities  for,  sale  to the Investor at each of the Closings pursuant to this
Agreement  under  applicable securities or "Blue Sky" laws of such states of the
United  States,  as reasonably specified by Investor, and shall provide evidence
of  any  such  action  so taken to the Investor on or prior to the Closing Date.
(C)  REPORTING STATUS. Until the earlier to occur of (I) the first date which is
after  the  date this Agreement is terminated pursuant to Section 9 and on which
the  Holders  (as that term is defined in the Registration Rights Agreement) may
sell  all  of  the  Securities  without  restriction  pursuant  to  Rule  144(k)
promulgated  under  the  1933  Act  (or successor thereto); and (II) the date on
which (A) the Holders shall have sold all the Securities; and (B) this Agreement
has  been  terminated  pursuant  to  Section  9 (the "Registration Period"), the
Company shall file all reports required to be filed with the SEC pursuant to the
1934  Act, and the Company shall not terminate its status as a reporting company
under  the  1934  Act.
(D)  USE  OF  PROCEEDS.  The  Company will use the proceeds from the sale of the
Shares  (excluding  amounts  paid  by  the  Company for fees as set forth in the
Transaction  Documents)  for  general corporate and working capital purposes and
acquisitions  or assets, businesses or operations or for other purposes that the
Board  of  Directors  deem  to  be  in  the  best  interest  of  the  Company.
(E)  FINANCIAL INFORMATION. The Company agrees to make available to the Investor
via  EDGAR  or  other  electronic means the following to the Investor during the
Registration  Period:  (I) within five (5) Trading Days after the filing thereof
with the SEC, a copy of its Annual Reports on Form 10-KSB, its Quarterly Reports
on  Form 10-QSB, any Current Reports on Form 8-K and any Registration Statements
or  amendments  filed  pursuant  to  the  1933  Act; (II) on the same day as the
release thereof, facsimile copies of all press releases issued by the Company or
any  of its Subsidiaries; (III) copies of any notices and other information made
available  or  given  to  the  shareholders  of  the  Company  generally,
contemporaneously  with  the  making  available  or  giving  thereof  to  the
shareholders;  and  (IV)  within  two  (2)  calendar  days of filing or delivery
thereof, copies of all documents filed with, and all correspondence sent to, the
Principal Market, any securities exchange or market, or the National Association
of  Securities  Dealers,  Inc.,  unless  such  information is material nonpublic
information.
(F)  RESERVATION OF SHARES. Subject to the following sentence, the Company shall
take  all action necessary to at all times have authorized, and reserved for the
purpose  of  issuance,  a sufficient number of shares of Common Stock to provide
for  the  issuance  of  the  Securities hereunder. In the event that the Company
determines  that  it  does  not have a sufficient number of authorized shares of
Common  Stock  to  reserve  and keep available for issuance as described in this
Section  5(f),  the  Company  shall  use  its commercially reasonable efforts to
increase  the number of authorized shares of Common Stock by seeking shareholder
approval  for  the  authorization  of  such  additional  shares.
(G)  LISTING.  The Company shall promptly secure and maintain the listing of all
of  the Registrable Securities (as defined in the Registration Rights Agreement)
upon  the  Principal  Market  and  each  other  national securities exchange and
automated  quotation  system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance) and shall maintain, such listing
of  all Registrable Securities from time to time issuable under the terms of the
Transaction  Documents.  Neither  the  Company nor any of its Subsidiaries shall
take any action which would be reasonably expected to result in the delisting or
suspension of the Common Stock on the Principal Market (excluding suspensions of
not  more  than one (1) trading day resulting from business announcements by the
Company).  The  Company  shall  promptly  provide  to the Investor copies of any
notices  it  receives  from  the  Principal  Market  regarding  the  continued
eligibility  of  the Common Stock for listing on such automated quotation system
or  securities  exchange.  The  Company  shall  pay  all  fees  and  expenses in
connection  with  satisfying  its  obligations  under  this  Section  5(g).
(H) TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall cause each of
its  Subsidiaries not to, enter into, amend, modify or supplement, or permit any
Subsidiary  to  enter  into,  amend,  modify  or  supplement,  any  agreement,
transaction,  commitment  or  arrangement  with  any  of its or any Subsidiary's
officers,  directors,  persons who were officers or directors at any time during
the  previous two (2) years, shareholders who beneficially own 5% or more of the
Common Stock, or Affiliates or with any individual related by blood, marriage or
adoption  to  any such individual or with any entity in which any such entity or
individual  owns  a  5%  or  more  beneficial interest (each a "Related Party"),
except  for  (I)  customary  employment  arrangements  and  benefit  programs on
reasonable  terms, (II) any agreement, transaction, commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would have been
obtainable  from a person other than such Related Party, or (III) any agreement,
transaction,  commitment  or  arrangement which is approved by a majority of the
disinterested directors of the Company. For purposes hereof, any director who is
also  an  officer of the Company or any Subsidiary of the Company shall not be a
disinterested  director  with  respect  to  any  such  agreement,  transaction,
commitment  or  arrangement. "Affiliate" for purposes hereof means, with respect
to  any person or entity, another person or entity that, directly or indirectly,
(I)  has  a  5% or more equity interest in that person or entity, (II) has 5% or
more  common ownership with that person or entity, (III) controls that person or
entity, or (IV) is under common control with that person or entity. "Control" or
"Controls"  for  purposes  hereof  means  that a person or entity has the power,
direct  or  indirect,  to  conduct  or  govern the policies of another person or
entity.
(I)  FILING  OF  FORM  8-K. On or before the date which is four (4) Trading Days
after  the  Execution  Date, the Company shall file a Current Report on Form 8-K
with  the  SEC  describing  the  terms  of  the  transaction contemplated by the
Transaction  Documents  in  the form required by the 1934 Act, if such filing is
required.
(J)  CORPORATE  EXISTENCE.  The  Company  shall  use its commercially reasonable
efforts  to  preserve  and  continue  the  corporate  existence  of the Company.
(K) NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE
A  PUT. The Company shall promptly notify Investor upon the occurrence of any of
the  following  events  in  respect  of  a  Registration  Statement  or  related
prospectus  in  respect  of  an  offering  of the Securities: (I) receipt of any
request  for  additional  information  by  the SEC or any other federal or state
governmental  authority  during  the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus;  (II)  the  issuance  by  the  SEC  or  any  other  federal or state
governmental  authority  of  any  stop order suspending the effectiveness of any
Registration  Statement  or  the initiation of any proceedings for that purpose;
(III)  receipt  of  any  notification  with  respect  to  the  suspension of the
qualification  or exemption from qualification of any of the Securities for sale
in  any  jurisdiction  or  the  initiation  or notice of any proceeding for such
purpose;  (IV)  the happening of any event that makes any statement made in such
Registration  Statement  or  related  prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that  requires  the making of any changes in the Registration Statement, related
prospectus  or  documents  so  that, in the case of a Registration Statement, it
will  not  contain  any untrue statement of a material fact or omit to state any
material  fact required to be stated therein or necessary to make the statements
therein  not misleading, and that in the case of the related prospectus, it will
not  contain  any  untrue  statement  of  a  material  fact or omit to state any
material  fact required to be stated therein or necessary to make the statements
therein,  in  the  light  of  the  circumstances under which they were made, not
misleading; and (V) the Company's reasonable determination that a post-effective
amendment  to  the  Registration Statement would be appropriate, and the Company
shall  promptly  make  available to Investor any such supplement or amendment to
the related prospectus. The Company shall not deliver to Investor any Put Notice
during  the  continuation  of  any  of  the  foregoing  events.
(L)  REIMBURSEMENT.  If  (I)  Investor  becomes  involved in any capacity in any
action,  proceeding  or investigation brought by any shareholder of the Company,
in  connection  with  or  as  a  result  of the consummation of the transactions
contemplated  by  the  Transaction Documents, or if Investor is impleaded in any
such  action,  proceeding or investigation by any person (other than as a result
of  a  breach of the Investor's representations and warranties set forth in this
Agreement);  or  (II)Investor  becomes  involved  in any capacity in any action,
proceeding  or investigation brought by the SEC against or involving the Company
or  in  connection  with  or as a result of the consummation of the transactions
contemplated by the Transaction Documents (other than as a result of a breach of
the  Investor's  representations and warranties set forth in this Agreement), or
if  Investor is impleaded in any such action, proceeding or investigation by any
person,  then  in  any  such  case,  the Company will reimburse Investor for its
reasonable legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, as such expenses are incurred. In
addition,  other  than  with  respect to any matter in which Investor is a named
party, the Company will pay to Investor the charges, as reasonably determined by
Investor,  for  the  time  of  any  officers or employees of Investor devoted to
appearing  and  preparing  to  appear as witnesses, assisting in preparation for
hearings,  trials  or  pretrial matters, or otherwise with respect to inquiries,
hearing,  trials,  and  other proceedings relating to the subject matter of this
Agreement. The reimbursement obligations of the Company under this section shall
be  in  addition  to  any  liability which the Company may otherwise have, shall
extend upon the same terms and conditions to any affiliates of Investor that are
actually  named  in  such  action,  proceeding  or  investigation, and partners,
directors,  agents,  employees, attorneys, accountants, auditors and controlling
persons  (if  any),  as the case may be, of Investor and any such affiliate, and
shall be binding upon and inure to the benefit of any successors of the Company,
Investor  and  any  such  affiliate  and  any  such  person.

(M)  TRANSFER  AGENT.  Upon effectiveness of the Registration Statement, and for
so  long  as the Registration Statement is effective,  the Company shall deliver
instructions  to  its  transfer  agent  to issue Shares to the Investor that are
covered  for  resale  by the Registration Statement free of restrictive legends.
SECTION  6.  COVER.
If  the  number of Shares represented by any Put Notice (s) become restricted or
such  Shares are no longer free trading for any reason, and after the applicable
Closing  Date,  the  Investor  purchases,  in  an  open  market  transaction  or
otherwise,  the  Company's Common Stock (the "Covering Shares") in order to make
delivery  in  satisfaction  of a sale of Common Stock by the Investor (the "Sold
Shares"),  which  delivery  such  Investor  anticipated to make using the Shares
represented  by  the  Put  Notice  (a  "Buy-In"),  the  Company shall pay to the
Investor the Buy-In Adjustment Amount (as defined below). The "Buy-In Adjustment
Amount"  is  the amount equal to the excess, if any, of (A) the Investor's total
purchase price (including brokerage commissions, if any) for the Covering Shares
over  (B) the net proceeds (after brokerage commissions, if any) received by the
Investor  from  the  sale  of  the Sold Shares. The Company shall pay the Buy-In
Adjustment  Amount  to  the  Investor in immediately available funds immediately
upon demand by the Investor. By way of illustration and not in limitation of the
foregoing,  if the Investor purchases Common Stock having a total purchase price
(including  brokerage  commissions) of $11,000 to cover a Buy-In with respect to
the  Common  Stock  it  sold  for net proceeds of $10,000, the Buy-In Adjustment
Amount which the Company will be required to pay to the Investor will be $1,000.
SECTION  7.  CONDITIONS  OF  THE  COMPANY'S  OBLIGATION  TO  SELL.
The  obligation hereunder of the Company to issue and sell the Securities to the
Investor is further subject to the satisfaction, at or before each Closing Date,
of  each  of  the following conditions set forth below. These conditions are for
the  Company's  sole benefit and may be waived by the Company at any time in its
sole  discretion.
(A) The Investor shall have executed each of this Agreement and the Registration
Rights  Agreement  and  delivered  the  same  to  the  Company.
(B)  The Investor shall have delivered to the Company the Purchase Price for the
Securities being purchased by the Investor between the end of the Pricing Period
and  the  Closing Date via a Put Settlement Sheet (hereto attached as Exhibit D)
After  receipt  of  confirmation of delivery of such Securities to the Investor,
the  Investor,  by  wire transfer of immediately available funds pursuant to the
wire  instructions  provided by the Company will disburse the funds constituting
the  Purchase  Amount.
(C)  No statute, rule, regulation, executive order, decree, ruling or injunction
shall  have  been  enacted,  entered,  promulgated  or  endorsed by any court or
governmental  authority  of  competent  jurisdiction  which  prohibits  the
consummation  of  any  of  the  transactions  contemplated  by  this  Agreement.
SECTION  8.  FURTHER  CONDITIONS  OF  THE  INVESTOR'S  OBLIGATION  TO  PURCHASE.
The  obligation  of  the Investor hereunder to purchase Shares is subject to the
satisfaction,  on  or  before  each  Closing  Date,  of  each  of  the following
conditions  set  forth  below.
(A)  The  Company  shall  have  executed  each  of the Transaction Documents and
delivered  the  same  to  the  Investor.
(B)  The  Common Stock shall be authorized for quotation on the Principal Market
and  trading  in the Common Stock shall not have been suspended by the Principal
Market  or  the  SEC,  at  any time beginning on the date hereof and through and
including  the  respective  Closing Date (excluding suspensions of not more than
one  (1)  Trading  Day  resulting  from  business  announcements by the Company,
provided  that such suspensions occur prior to the Company's delivery of the Put
Notice  related  to  such  Closing).
(C)  The representations and warranties of the Company shall be true and correct
as of the date when made and as of the applicable Closing Date as though made at
that  time  (except  for  (I)  representations and warranties that speak as of a
specific  date  and  (II)  with  respect to the representations made in Sections
4(g),  (h)  and  (j) and the third sentence of Section 4(k) hereof, events which
occur  on  or  after the date of this Agreement and are disclosed in SEC filings
made  by  the Company at least ten (10) Trading Days prior to the applicable Put
Notice  Date)  and the Company shall have performed, satisfied and complied with
the  covenants,  agreements and conditions required by the Transaction Documents
to  be  performed,  satisfied  or complied with by the Company on or before such
Closing  Date.  The  Investor  may  request  an  update  as of such Closing Date
regarding  the  representation  contained  in  Section  4(c)  above.
(D)  The  Company  shall  have  executed  and  delivered  to  the  Investor  the
certificates  representing,  or have executed electronic book-entry transfer of,
the  Securities  (in  such  denominations  as such Investor shall request) being
purchased  by  the  Investor  at  such  Closing.
(E)  The  Board  of  Directors  of  the  Company  shall have adopted resolutions
consistent  with Section 4(b)(ii) above (the "Resolutions") and such Resolutions
shall  not  have  been  amended  or  rescinded  prior  to  such  Closing  Date.
(F)  Reserved
(G)  No statute, rule, regulation, executive order, decree, ruling or injunction
shall  have  been  enacted,  entered,  promulgated  or  endorsed by any court or
governmental  authority  of  competent  jurisdiction  which  prohibits  the
consummation  of  any  of  the  transactions  contemplated  by  this  Agreement.
(H)  The  Registration  Statement shall be effective on each Closing Date and no
stop  order  suspending the effectiveness of the Registration statement shall be
in  effect  or  to  the  Company's  knowledge  shall  be  pending or threatened.
Furthermore,  on  each  Closing  Date (I) neither the Company nor Investor shall
have  received  notice  that the SEC has issued or intends to issue a stop order
with  respect  to  such  Registration  Statement  or  that the SEC otherwise has
suspended  or withdrawn the effectiveness of such Registration Statement, either
temporarily  or  permanently,  or intends or has threatened to do so (unless the
SEC's concerns have been addressed and Investor is reasonably satisfied that the
SEC  no longer is considering or intends to take such action), and (II) no other
suspension  of  the  use or withdrawal of the effectiveness of such Registration
Statement  or  related  prospectus  shall  exist.
(I)  At  the  time  of  each  Closing,  the  Registration  Statement  (including
information  or  documents incorporated by reference therein) and any amendments
or supplements thereto shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make  the  statements  therein  not  misleading  or  which  would require public
disclosure  or  an  update  supplement  to  the  prospectus.

(J)  If  applicable,  the  shareholders  of  the Company shall have approved the
issuance  of  any  Shares  in  excess  of  the  Maximum Common Stock Issuance in
accordance  with  Section  2(i)  or  the Company shall have obtained appropriate
approval pursuant to the requirements of Delaware law and the Company's Articles
of  Incorporation  and  By-laws.

(K)  The  conditions  to  such Closing set forth in Section 2(f) shall have been
satisfied  on  or  before  such  Closing  Date.

(L)  The  Company  shall  have certified to the Investor the number of Shares of
Common  Stock  outstanding  when  a  Put  Notice  is  given  to  the  Investor.
SECTION 9. TERMINATION. This Agreement shall terminate upon any of the following
events:
(I)  when  the  Investor  has  purchased  an aggregate of Twenty Million dollars
($20,000,000) in the Common Stock of the Company pursuant to this Agreement; or,
(II)  on  the  date  which  is  thirty-six (36) months after the Effective Date;
SECTION  10.  SUSPENSION

This  Agreement  shall  be suspended upon any of the following events, and shall
remain  suspended  until  such  event  is  rectified:

     (I)  the trading of the Common Stock is suspended by the SEC, the Principal
Market  or  the NASD for a period of two (2) consecutive Trading Days during the
Open  Period;  or,

     (II)  The Common Stock ceases to be registered under the 1934 Act or listed
or  traded  on  the  Principal  Market.  Upon  the  occurrence  of  one  of  the
above-described  events,  the Company shall send written notice of such event to
the  Investor.
SECTION  11.  INDEMNIFICATION.
In  consideration of the parties mutual obligations set forth In the Transaction
Documents, each of the parties (in such capacity, an "Indemnitor") shall defend,
protect,  indemnify  and  hold  harmless  the other and all of the other party's
shareholders,  officers,  directors,  employees, counsel, and direct or indirect
investors  and  any  of  the  foregoing person's agents or other representatives
(including,  without  limitation,  those  retained  in  connection  with  the
transactions  contemplated  by this Agreement) (collectively, the "Indemnitees")
from  and  against any and all actions, causes of action, suits, claims, losses,
costs,  penalties,  fees,  liabilities  and  damages, and reasonable expenses in
connection  therewith (irrespective of whether any such Indemnitee is a party to
the  action  for  which  indemnification  hereunder  is  sought),  and including
reasonable  attorneys'  fees  and disbursements (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (I)
any  misrepresentation  or  breach of any representation or warranty made by the
Indemnitor  or any other certificate, instrument or document contemplated hereby
or  thereby;  (II)  any  breach  of any covenant, agreement or obligation of the
Indemnitor  contained  in  the  Transaction  Documents or any other certificate,
instrument  or  document  contemplated  hereby or thereby; or (III) any cause of
action,  suit  or claim brought or made against such Indemnitee by a third party
and  arising  out  of  or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document  contemplated  hereby  or  thereby,  except  insofar  as  any  such
misrepresentation,  breach  or  any  untrue statement, alleged untrue statement,
omission  or  alleged  omission  is made in reliance upon and in conformity with
information  furnished  to  Indemnitor which is specifically intended for use in
the  preparation  of  any  such  Registration Statement, preliminary prospectus,
prospectus  or  amendments  to  the prospectus. To the extent that the foregoing
undertaking  by  the  Indemnitor  may  be  unenforceable  for  any  reason,  the
Indemnitor  shall  make the maximum contribution to the payment and satisfaction
of  each  of  the  Indemnified Liabilities which is permissible under applicable
law. The indemnity provisions contained herein shall be in addition to any cause
of  action  or  similar  rights  Indemnitor  may  have,  and any liabilities the
Indemnitor  or  the  Indemnitees  may  be  subject  to.
SECTION  12.  GOVERNING  LAW;  MISCELLANEOUS.
(A)  GOVERNING  LAW.  This  Agreement  shall  be  governed by and interpreted in
accordance  with the laws of the Commonwealth of Massachusetts without regard to
the principles of conflict of laws. Each party hereby irrevocably submits to the
exclusive  jurisdiction  of  the state and federal courts sitting in the City of
Boston,  County  of Suffolk, for the adjudication of any dispute hereunder or in
connection  herewith  or  with  any transaction contemplated hereby or discussed
herein,  and  hereby  irrevocably  waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that  it  is  not personally subject to the
jurisdiction  of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each  party hereby irrevocably waives personal service of process and
consents  to  process  being  served  in  any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service  of process and notice thereof. Nothing contained herein shall be deemed
to  limit  in any way any right to serve process in any manner permitted by law.
If  any  provision  of  this  Agreement shall be invalid or unenforceable in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity  or  enforceability  of  any  provision  of this Agreement in any other
jurisdiction.

(I)     DISPUTES  SUBJECT  TO  ARBITRATION  GOVERNED  BY  MASSACHUSETTS  LAW
---     --------------------------------------------------------------------
     All  disputes  arising  under  this  agreement  shall  be  governed  by and
interpreted  in  accordance  with the laws of the Commonwealth of Massachusetts,
without regard to principles of conflict of laws.  The parties to this agreement
will  submit all disputes arising under this agreement to arbitration in Boston,
Massachusetts before a single arbitrator of the American Arbitration Association
("AAA").  The  arbitrator  shall  be selected by application of the rules of the
AAA, or by mutual agreement of the parties, except that such arbitrator shall be
an  attorney  admitted to practice law in the Commonwealth of Massachusetts.  No
party  to  this agreement will challenge the jurisdiction or venue provisions as
provided  in  this  section.
     (ii)      Waiver  of  Jury  Trial.
     AS  A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT,
THE  PARTIES  HERETO  HEREBY  WAIVE  ANY  RIGHT  TO  TRIAL  BY JURY IN ANY LEGAL
PROCEEDING  RELATED  IN  ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER
DOCUMENTS  ASSOCIATED  WITH  THIS  TRANSACTION.
(B)  LEGAL  FEES;  AND  MISCELLANEOUS FEES. Except as otherwise set forth in the
Transaction  Documents,  each  party  shall  pay  the  fees  and expenses of its
advisers,  counsel,  the  accountants  and  other experts, if any, and all other
expenses  incurred  by  such  party  incident  to  the negotiation, preparation,
execution,  delivery  and performance of this Agreement. Any attorneys' fees and
expenses  incurred  by  either the Company or by the Investor in connection with
the  preparation,  negotiation, execution and delivery of any amendments to this
Agreement  or  relating to the enforcement of the rights of any party, after the
occurrence  of any breach of the terms of this Agreement by another party or any
default  by another party in respect of the transactions contemplated hereunder,
shall  be  paid  on  demand  by  the  party  which breached the Agreement and/or
defaulted,  as  the case may be. The Company shall pay all stamp and other taxes
and  duties  levied  in  connection  with  the  issuance  of  any  Securities.
(C)  COUNTERPARTS.  This  Agreement  may  be  executed  in two or more identical
counterparts,  all  of  which shall be considered one and the same agreement and
shall  become  effective  when  counterparts  have been signed by each party and
delivered  to  the  other  party;  provided  that a facsimile signature shall be
considered  due  execution  and shall be binding upon the signatory thereto with
the  same force and effect as if the signature were an original, not a facsimile
signature.
(D)  HEADINGS;  SINGULAR/PLURAL.  The  headings  of  this  Agreement  are  for
convenience  of  reference  and  shall  not  form  part  of,  or  affect  the
interpretation  of,  this  Agreement.  Whenever  required by the context of this
Agreement, the singular shall include the plural and masculine shall include the
feminine.
(E)  SEVERABILITY.  If  any  provision  of  this  Agreement  shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction  or  the  validity  or  enforceability  of  any  provision  of this
Agreement  in  any  other  jurisdiction.
(F) ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other prior oral
or  written  agreements  between the Investor, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this  Agreement  and  the  instruments  referenced  herein  (including the other
Transaction  Documents)  contain  the  entire  understanding of the parties with
respect  to  the  matters covered herein and therein and, except as specifically
set  forth  herein  or  therein,  neither the Company nor the Investor makes any
representation,  warranty, covenant or undertaking with respect to such matters.
No  provision  of  this  Agreement may be amended other than by an instrument in
writing  signed  by the Company and the Investor, and no provision hereof may be
waived  other  than by an instrument in writing signed by the party against whom
enforcement  is  sought.
(G)  NOTICES.  Any  notices  or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have  been  delivered  (I)  upon  receipt,  when delivered personally; (II) upon
receipt,  when  sent  by  facsimile  (provided  confirmation  of transmission is
mechanically or electronically generated and kept on file by the sending party);
or  (III)  one  (1)  day  after  deposit  with a nationally recognized overnight
delivery  service,  in  each case properly addressed to the party to receive the
same.  The  addresses  and  facsimile  numbers for such communications shall be:
IF  TO  THE  COMPANY:

Hyderdynamics  Corporation
9700  Bissonnet
Suite  1700
Houston,  TX  77036
Telephone:  713-353-9400
Facsimile:  713-353-9421


IF  TO  THE  INVESTOR:

Dutchess  Private  Equities  fund,  LP,  II
312  Stuart  Street
Boston,  MA  02116
Telephone:  617-960-3582
Facsimile:  617-249-0947


Each  party shall provide five (5) days' prior written notice to the other party
of  any  change  in  address  or  facsimile  number.
(H)  NO  ASSIGNMENT.  This  Agreement  may  not  be  assigned.
(I)  NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of
the  parties  hereto and is not for the benefit of, nor may any provision hereof
be  enforced  by,  any  other  person.
(J) SURVIVAL. The representations and warranties of the Company and the Investor
contained  in  Sections  2  and  3,  the  agreements  and covenants set forth in
Sections  4  and  5, and the indemnification provisions set forth in Section 10,
shall  survive  each  of  the  Closings  and  the termination of this Agreement.
 (K)  PUBLICITY.  The  Company  and  Investor  shall  consult with each other in
issuing any press releases or otherwise making public statements with respect to
the  transactions  contemplated  hereby  and no party shall issue any such press
release or otherwise make any such public statement without the prior consent of
the  other parties, which consent shall not be unreasonably withheld or delayed,
except that no prior consent shall be required if such disclosure is required by
law,  in  which  such  case the disclosing party shall provide the other parties
with  prior  notice of such public statement. Notwithstanding the foregoing, the
Company  shall  not  publicly  disclose  the  name of Investor without the prior
consent  of  such  Investor,  except  to  the  extent  required by law. Investor
acknowledges  that  this  Agreement and all or part of the Transaction Documents
may  be  deemed  to  be  "material  contracts"  as  that term is defined by Item
601(b)(10)  of Regulation S-B, and that the Company may therefore be required to
file  such  documents  as  exhibits  to reports or registration statements filed
under  the  1933 Act or the 1934 Act. Investor further agrees that the status of
such documents and materials as material contracts shall be determined solely by
the  Company,  in  consultation  with  its  counsel.
(L) FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and
performed,  all  such further acts and things, and shall execute and deliver all
such  other  agreements,  certificates,  instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
(M)  PLACEMENT  AGENT.  The  Company  agrees  to pay _____________, a registered
broker  dealer ____ percent (__%) of the Put Amount on each draw toward the fee.
The  Investor  shall have no obligation with respect to any fees or with respect
to  any  claims  made by or on behalf of other persons or entities for fees of a
type  contemplated  in  this  Section  that  may  be  due in connection with the
transactions  contemplated  by  the  Transaction  Documents.  The  Company shall
indemnify  and hold harmless the Investor, their employees, officers, directors,
agents,  and  partners,  and  their  respective affiliates, from and against all
claims,  losses,  damages,  costs  (including  the  costs  of  preparation  and
attorney's  fees)  and  expenses  incurred  in  respect  of  any such claimed or
existing  fees,  as  such  fees  and  expenses  are  incurred.
(N)  NO  STRICT CONSTRUCTION. The language used in this Agreement will be deemed
to  be the language chosen by the parties to express their mutual intent, and no
rules  of  strict  construction  will  be  applied  against  any  party.
(O)  REMEDIES.  The Investor and each holder of the Shares shall have all rights
and  remedies  set forth in this Agreement and the Registration Rights Agreement
and  all  rights  and  remedies which such holders have been granted at any time
under  any  other agreement or contract and all of the rights which such holders
have  under  any  law.  Any person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any default or breach
of  any  provision  of  this  Agreement,  including  the  recovery of reasonable
attorneys  fees  and  costs,  and  to  exercise all other rights granted by law.
(P)  PAYMENT  SET  ASIDE.  To  the  extent  that  the Company makes a payment or
payments to the Investor hereunder or under the Registration Rights Agreement or
the  Investor enforces or exercises its rights hereunder or thereunder, and such
payment  or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set  aside,  recovered from, disgorged by or are required to be refunded, repaid
or  otherwise  restored  to the Company, a trustee, receiver or any other person
under  any  law  (including,  without  limitation,  any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such  restoration  the  obligation  or  part  thereof  originally intended to be
satisfied  shall  be  revived  and continued in full force and effect as if such
payment  had  not  been  made  or  such  enforcement or setoff had not occurred.
(Q)  PRICING  OF  COMMON STOCK. For purposes of this Agreement, the bid price of
the  Common  Stock  in  this  Agreement  shall  be  as  reported  on  Bloomberg.
SECTION  13.  Non-Disclosure  of  Non-Public  Information.
(a)  The  Company shall not disclose non-public information to the Investor, its
advisors, or its representatives, unless prior to disclosure of such information
the  Company  identifies  such  information,  in  writing,  as  being non-public
information  and  provides  the Investor, such advisors and representatives with
the  opportunity  to  accept or refuse to accept such non-public information for
review. The Company may, as a condition to disclosing any non-public information
hereunder,  require  the Investor's advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investor.
(b)  Nothing herein shall require the Company to disclose non-public information
to  the  Investor or its advisors or representatives, and the Company represents
that  it  does  not  disseminate  non-public  information  to  any investors who
purchase  stock  in  the  Company  in a public offering, to money managers or to
securities  analysts, provided, however, that notwithstanding anything herein to
the  contrary, the Company will, as hereinabove provided, immediately notify the
advisors  and  representatives of the Investor and, if any, underwriters, of any
event  or  the existence of any circumstance (without any obligation to disclose
the  specific  event  or  circumstance)  of which it becomes aware, constituting
non-public  information (whether or not requested of the Company specifically or
generally  during  the  course  of  due  diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would  cause  such  prospectus  to  include a material misstatement or to omit a
material  fact  required  to  be stated therein in order to make the statements,
therein,  in light of the circumstances in which they were made, not misleading.
Nothing  contained  in  this  Section  13  shall  be construed to mean that such
persons  or entities other than the Investor (without the written consent of the
Investor  prior  to  disclosure  of  such information) may not obtain non-public
information  in  the  course  of conducting due diligence in accordance with the
terms  of  this  Agreement  and nothing herein shall prevent any such persons or
entities  from  notifying  the  Company  of their opinion that based on such due
diligence  by such persons or entities, that the Registration Statement contains
an  untrue  statement  of  material fact or omits a material fact required to be
stated  in  the  Registration  Statement  or  necessary  to  make the statements
contained  therein,  in  light of the circumstances in which they were made, not
misleading.

                                      * * *

SIGNATURE  PAGE  OF  INVESTMENT  AGREEMENT
Your  signature  on  this Signature Page evidences your agreement to be bound by
the terms and conditions of the Investment Agreement and the Registration Rights
Agreement  as  of  the  date  first  written  above.
The  undersigned signatory hereby certifies that he has read and understands the
Investment  Agreement,  and  the representations made by the undersigned in this
Investment Agreement are true and accurate, and agrees to be bound by its terms.
DUTCHESS  PRIVATE  EQUITIES  FUND,  II,  L.P.
BY  ITS  GENERAL  PARTNER,
DUTCHESS  CAPITAL  MANAGEMENT,  LLC

By: /s/Douglas Leighton
   --------------------
Douglas  H.  Leighton,  Managing  Member


HYPERDYNAMICS  CORPORATION
By: /s/Kent Watts
    -------------
Kent  Watts,  Chief  Executive  Officer


LIST  OF  EXHIBITS
------------------

EXHIBIT  A               Registration  Rights  Agreement
EXHIBIT  B               Opinion  of  Company's  Counsel  (included as Exhibit 2
on  the  Irrevocable       Transfer  Agent  Agreement)
EXHIBIT  C               Put  Notice
EXHIBIT  D               Put  Settlement  Sheet

LIST  OF  SCHEDULES
-------------------

SCHEDULE  4(A)  SUBSIDIARIES

EXHIBIT  A

EXHIBIT  B


 (included  as  Exhibit  2  on  the  Irrevocable  Transfer  Agent  Agreement)

EXHIBIT  C
Date:
RE:  Put  Notice  Number  __
Dear  Mr.  Leighton,
This  is  to  inform you that as of today, Hyperdynamics Corporation, a Delaware
corporation (the "Company"), hereby elects to exercise its right pursuant to the
Investment  Agreement  to  require  Dutchess  Private Equities Fund, II,  LP. to
purchase  shares  of  its  common  stock.  The  Company  hereby  certifies that:
The  amount  of  this  put  is  $__________.
The  Pricing  Period  runs  from  ________  until  _______.
The  current  number  of  shares  issued  and outstanding as of the Company are:

Regards,

Kent  Watts
CEO
Hyperdynamics  Corporation



EXHIBIT  D
PUT  SETTLEMENT  SHEET
Date:
Kent,
Pursuant  to  the  Put  given  by  Hyperdynamics Corporation to Dutchess Private
Equities  Fund,  II,  L.P.  on _________________ 200x, we are now submitting the
amount  of  common  shares  for  you  to  issue  to  Dutchess.
Please  have  a  certificate  bearing  no restrictive legend totaling __________
shares issued to Dutchess Private Equities Fund, II, LP immediately and send via

DWAC  to  the  following  account:
XXXXXX

If  not  DWAC  eligible,  please  send  FedEx  Priority  Overnight  to:
XXXXXX
Once  these  shares  are  received  by  us,  we will have the funds wired to the
Company.

Regards,

Douglas  H.  Leighton

DATE                        PRICE

Date  of  Day  1     Closing  Bid  of  Day  1
Date  of  Day  2     Closing  Bid  of  Day  2
Date  of  Day  3     Closing  Bid  of  Day  3
Date  of  Day  4     Closing  Bid  of  Day  4
Date  of  Day  5     Closing  Bid  of  Day  5



LOWEST  1  (ONE)  CLOSING  BID  IN  PRICING  PERIOD
                                             ------------

PUT  AMOUNT
                                             ------------

AMOUNT  WIRED  TO  COMPANY
                                             ------------

PURCHASE  PRICE  (95%  (NINETY-FIVE  PERCENT))
                                             ------------

AMOUNT  OF  SHARES  DUE
                                             ------------



The  undersigned has completed this Put as of this ___th day of _________, 20xx.
HYPERDYNAMICS  CORPORATION

/s/Kent Watts
--------------
KENT  WATTS,  CEO

SCHEDULE  4(C)  CAPITALIZATION

SCHEDULE  4(E)  CONFLICTS

SCHEDULE  4(G)  MATERIAL  CHANGES

SCHEDULE  4(H)  LITIGATION

SCHEDULE  4(L)  INTELLECTUAL  PROPERTY

SCHEDULE  4(N)  LIENS

SCHEDULE  4(T)  CERTAIN  TRANSACTIONS