Unassociated Document


    


     

    AGREEMENT FOR EXCLUSIVE
DEALING

     

     AND LETTER OF
INTENT

    


     

    This
AGREEMENT FOR EXCLUSIVE DEALING
AND LETTER OF INTENT (the “LOI”), is effective November
26th, 2009
(the “Effective Date”),
between

     

    SCS
Corporation, an Affiliate of Hyperdynamics Corporation, a company incorporated
under Delaware statutes, United States of America, whose Head Office is located
at: One Sugar Creek Center Blvd, Suite 125, Sugar Land, Texas 77478, USA
(collectively “HDY-SCS”), of the first part, and
Repsol Exploración, S.A. a company incorporated in the Kingdom of Spain whose
Head Office is located at Paseo de la Castellana 280, 28046 Madrid, Spain,
(“REPSOL”)  of
the second part.

     

    HDY and
REPSOL may also be referred to herein individually as a “Party” or collectively as the
“Parties”.

     

    Recitals:

     

    WHEREAS,
HDY owns, through its Affiliate, SCS, certain rights pertaining to the
Hydrocarbon Production Sharing Contract dated September 22, 2006 between the
Republic of Guinea and SCS (the “PSC”); and

     

    WHEREAS,
a Memorandum of Understanding in relation to the PSC has been entered into
between the Republic of Guinea and SCS dated September 11, 2009 (the “MoU”); and

     

    WHEREAS,
REPSOL possesses certain expertise and resources that it believes will be
beneficial in the exploration and development of the area to which the PSC
applies as may be varied pursuant to the MoU (the “Project”); and

     

    WHEREAS,
REPSOL wishes to evaluate its potential participation in the Project on an
exclusive basis; and

     

    WHEREAS,
HDY-SCS has executed an Agreement for Exclusive Dealing and Letter of Intent
with Dana Petroleum (E&P) Ltd, effective October 11, 2009, (“Dana Letter of
Intent”), which, among other things provides that HDY-SCS and its Affiliated
Companies including, without limitation SCS, will negotiate exclusively with
DANA with regard to the prospective acquisition by DANA of an undivided twenty
three percent (23%) participating interest in and under the PSC and the initial
Contract Area (as such term is defined in the PSC) (the “DANA Working
Interest”), and more specifically provides that HDY shall, and shall procure
that its Affiliated Companies including, without limitation, SCS shall not
initiate, or otherwise participate in, directly or indirectly, a solicitation of
any other offer or proposal for the sale, assignment or transfer, directly or
indirectly, through merger, consolidation or otherwise, of the DANA Working
Interest, which means any interest in the PSC and/or the Contract Area that is
or would be inclusive of the DANA Working Interest or continue negotiations or
discussions with other persons that have indicated an interest in acquiring such
an interest; and

     

    
      
         


      

      
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    WHEREAS,
HDY-SCS, represents and warrants that any actions, discussions or negotiations
between them and Repsol proceed in full respect of the Dana Letter of Intent and
do not intend that any actions, discussions or negotiations between the Parties
interfere with such Dana Letter of Intent or include or pertain to the
twenty-three percent (23%) participating interest subject to the Dana Letter of
Intent; and

     

    WHEREAS,
the Parties wish to record in this LOI certain binding and certain non-binding
commercial terms and conditions on which the Parties have agreed to continue
discussions and conduct further mutual evaluation and negotiations with the
possibility of, but not the obligation to, reaching binding definitive
agreement(s) as to REPSOL’s participation in the Project (the “Definitive Agreements” as
defined in Exhibit “A”).

     

    NOW,
THEREFORE, the Parties hereby agree as follows:

     

    Article
I

    Non-Binding
Provisions

    


    1.1           Non-Binding Nature of
Provisions. The Parties have set out in Exhibit “A” attached hereto
and incorporated herein their preliminary and non-binding understanding of
certain commercial terms and conditions which may be addressed in the
prospective Definitive Agreements. The Parties agree that no provision
of this LOI shall obligate either Party to enter into any Definitive Agreements,
and that no commercial terms set out in Exhibit “A” attached hereto shall
be legally binding in any way upon either Party. This LOI reflects only the
preliminary understanding of the Parties with respect to the potential due
diligence and negotiation with respect to a transaction regarding the Project,
and is not intended to, shall not be construed to, and does not constitute an
agreement of either Party to (a) perform due diligence, negotiate, or consummate
any transaction regarding the Project, or (b) enter into any Definitive
Agreements with respect to the Project.

     

    1.2.           Further,
the Parties expressly acknowledge and agree that this Article I of this LOI
(other than this Article 1.2), is not intended to be legally binding and that
neither Party shall have any obligation to the other with respect thereto unless
and until both Parties execute mutually agreed and duly authorized Definitive
Agreements. Further, it is understood that the Definitive Agreements
contemplated in this LOI are subject to review and approval in accordance with
the policies and procedures established by the each Party’s respective board of
directors for transactions of this nature.

     

    1.3           It
is envisaged that the Definitive Agreements will include (i) a sale and purchase
agreement in respect of the transfer of the REPSOL Participating Interest (as
hereinafter defined) (the “SPA”); (ii) an assignment of
the REPSOL Participating Interest, validly transferring title to the REPSOL
Participating Interest to REPSOL (the “Assignment of Participating Interest”);
(iii) a Deed of Assignment to serve as the muniment of the Assignment of
Participating Interest to be forward to the Government of the Republic of Guinea
for approval of the Assignment of Participating Interest pursuant to Article 23
of the PSC (the “Deed of Assignment”); and (iv) a joint operating agreement
based on the 2002 AIPN International Operating Agreement Model Form (the “JOA”) under which REPSOL is to
be designated Operator upon full payment of Consideration for Assignment of
Participating Interest (as defined in Exhibit “A”) and subject to government and
third party approvals and consents as required.  It is also intended
that, subsequent to execution of the Definitive Agreements, the Parties will
enter into a clarification of, an amendment to or restatement of the PSC as
required by, incorporating the relevant terms of, and superseding, the MoU (the
“PSC
Clarification”).  HDY-SCS will provide within seven (7) Working
days of the Effective Date an initial draft of the SPA, the PSC Assignment and
the JOA for review and evaluation by REPSOL.  The Parties will work
jointly in preparing the PSC Clarification to the PSC.  It is further
envisaged that the Parties will work together in a cooperative fashion on all
other technical, commercial and strategic matters and will attempt to
incorporate such cooperation into the relevant provisions of the JOA and the PSC
Clarification.


    
      
         


      

      
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    Article
II

    Binding
Provisions

    


    The
following provisions shall be binding upon the Parties:

     

    2.1.           Exclusive
Dealing.  HDY-SCS agrees that it and its Affiliates including,
without limitation SCS, will negotiate exclusively with REPSOL with regard to
the prospective acquisition by REPSOL of an undivided thirty-seven percent (37%)
participating interest in and under the PSC and the initial Contract Area (as
such term is defined in the PSC) (the “REPSOL Participating
Interest”).  More specifically, HDY-SCS shall, and shall
procure that its Affiliates including, without limitation, SCS shall: (i) not
initiate, or otherwise participate in, directly or indirectly, a solicitation of
any other offer or proposal for the sale, assignment or transfer, directly or
indirectly, through merger, consolidation or otherwise, of the REPSOL
Participating Interest, which means any interest in the PSC and/or the Contract
Area that is or would be inclusive of the REPSOL Participating Interest; and
(ii) cease negotiations and discussions with any other persons that have
indicated an interest in, or have submitted an offer to acquire any interest in
the REPSOL Participating Interest or any interest in the PSC and/or Contract
Area that is or would be inclusive of the REPSOL Participating
Interest.  The obligations of HDY/SCS and its Affiliates including,
without limitation, SCS, to deal exclusively with REPSOL herein will commence on
the Effective Date and continue until the earlier to occur of the Termination
Date or the Parties’ execution of mutually agreed and duly authorized Definitive
Agreements.

     

    After the
signature of this LOI Repsol commits to pay its share of the Seismic Acquisition
Payments, as specified in Exhibit A Seismic
Acquisition Payments.

     

    If the
Definitive Agreements are not executed within the agreed term established in
2.3 Repsol can at its sole option choose between the request of the
reimbursement of the costs of the Seismic Acquisition to HDY/SCS or to legally
own the property of such information.

     

    2.2           Due Diligence; Obligation to
Negotiate in Good Faith.  During the time period commencing on
the Effective Date and continuing until the earlier to occur of the Termination
Date or the Parties’ execution of  mutually agreed and duly authorized
Definitive Agreements, the Parties will conduct due diligence with respect to
the prospective transaction described herein, and shall negotiate in good faith
regarding such prospective transaction.


    
      
         


      

      
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    2.3           Term of this LOI.
Unless otherwise extended by mutual agreement of the Parties in writing, this
LOI shall terminate at midnight local time in Houston, Texas, on 31st January
2010, unless the mutually agreed and duly authorized Definitive Agreements have
been executed whichever occurs first, such date of termination being herein
referred to as the “Termination
Date”.

     

    HDY-SCS
may not unilaterally terminate this LOI prior to the Termination Date. If the
LOI terminates as a result of Definitive Agreements not having been executed
prior to the Termination Date, neither Party shall have any obligation or
liability to the other except to the extent that, prior to the Termination Date,
a Party has breached any of the binding provisions of this LOI.

     

    2.4           Liability. Nothing
contained in this LOI shall create or constitute or be deemed to create or
constitute a partnership between the Parties or any of them. Any liability of
the Parties hereunder shall be several and not joint or collective and each
Party shall be responsible only for its individual obligations
hereunder.

    


    Neither
Party shall be liable in an action initiated by one against the other for
special, indirect or consequential damages resulting from or arising out of this
LOI, including, without limitation, loss of value, loss of production, loss of
financial advantage, loss of profit or business interruptions, however same may
be caused.

     

    2.5           Confidentiality. The
terms and conditions of the Confidentiality Agreement entered into by REPSOL and
SCS on October 5, 2009 (the “CA”), are incorporated by
reference into this LOI and shall apply with regard to all information exchanged
or developed hereunder. Notwithstanding the foregoing, neither Party shall be
prohibited from making any disclosure if it is necessary to do so in order to
comply with the applicable laws, rules, or regulations of any governmental
entity, court, or stock exchange having jurisdiction over such Party or any of
its Affiliated Companies (which term shall have the same meaning herein as
defined in the CA).

     

    2.6           Repsol Participation Prior to
Execution of Definitive Agreements. Notwithstanding any other
provisions hereof, REPSOL shall be entitled to fully participate with HDY-SCS in
the evaluation of technical data leading to direction and interpretation of
geological and geophysical data as well as to participate in any meeting with
the Government of the Republic of Guinea during that interim period between the
LOI and  the execution of Definitive Agreements and, furthermore,
shall fully participate during such period in the preparation for negotiations
with the Ministry of Mines, Energy and Hydraulics of the Republic of Guinea (the
“Ministry”) regarding
the terms of the PSC Clarification; shall be kept fully appraised of the
progress of such negotiations; and, subject to Ministry consent, shall be
entitled to participate in such negotiations.   Such negotiations
shall be commenced as soon as reasonably practicable following the Effective
Date, and HDY/SCS will send a notice to Repsol regarding any meeting to be held
with the Ministry and/or Dana at least five (5) days before.


    
      
         


      

      
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    2.7           Press Releases.
Neither Party may issue press releases, public communications or public
statements regarding the existence or terms of this LOI and matters arising in
relation hereto unless and until the other Party has been furnished with a copy
of such statement in advance and has given written approval, which shall not be
unreasonably withheld and which shall be timely given, in no case exceeding
twenty-four (24) hours.  Notwithstanding the foregoing, neither Party
shall be prohibited from making any disclosure if it is necessary to do so in
order to comply with the applicable laws, rules, or regulations of any
governmental entity, court, or stock exchange having jurisdiction over such
Party or any of its Affiliated Companies.

     

    2.8           Applicable Law. This LOI and the
transactions contemplated herein, and the relationship of the Parties hereto
shall be interpreted and construed in accordance with the laws of England
excluding any conflict of laws principles which would refer the matter to the
laws of another jurisdiction. No Person other than a Party may enforce this LOI
by virtue of the Contracts (Right of Third Parties) Act 1999.

     

    


    Any dispute, controversy or claim
(“Dispute”) arising out of, relating to or in connection with this LOI,
including any question regarding its existence, validity or termination, or
regarding a breach hereof which cannot be resolved by good faith discussions
between the Parties within ninety (90) days (or such longer period as may be
agreed by the claimant Party) shall be referred by any Party to, and shall be
finally settled by, arbitration under and in accordance with the Rules of
Arbitration of the International Chamber of Commerce (the “Rules”).  A
Dispute shall be deemed to have arisen when either Party gives Notice to the
other to that effect.

    


    The place of arbitration shall be
London, England, and the award shall be deemed to have been made there. The
arbitration tribunal shall consist of three (3) arbitrators appointed in
accordance with the Rules. Arbitration shall be in the English language. The
decision of the arbitration tribunal shall include a statement of reasons for
such decision, the award shall be final and binding on the Parties, and judgment
thereon may be entered in any court having jurisdiction for its enforcement. The
Parties hereby expressly agree to exclude all rights to application or appeal
pursuant to Section 45 or Section 69 (as amended or otherwise) of the
Arbitration Act 1996 relating to any questions of law arising in the course of
the arbitration or with respect to any decision or award made.

    


    The costs of the arbitration
proceedings shall be borne according to the arbitration award. However, each
Party to the Dispute shall bear its own costs, including costs regarding its own
witnesses, expert witnesses, translators and attorneys, as well as such expert
witnesses, translators and legal fees, regardless of which Party
prevails.

    


    Without prejudice to the rights and
remedies otherwise available to a Party, the Parties agree that money damages
would not be an adequate remedy for any breach of this LOI and that a Party will
be entitled to specific performance or other equitable relief by way of
injunction if a Party breaches or threatens to breach any provision of this
LOI.


    
      
         


      

      
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    All matters relating to the
arbitration proceeding, the existence of the arbitration proceeding, documents
prepared produced and exchanged in such arbitration proceeding and the arbitral
award itself shall be kept confidential and not disclosed to third parties
unless such disclosure is (i) required in a Party’s efforts to compel
arbitration or in its efforts to enforce an arbitral award, (ii) required by
applicable law or by a governmental order, decree, regulation or rule or by any
stock exchange on which the shares of the disclosing Party or its Affiliates are
listed, or (iii) as otherwise agreed in writing by the Parties.

    


     

    2.9           Costs and Expenses.
Each Party shall be liable for its own legal, accounting and other costs and
expenses incurred by it in connection with the undertakings associated with this
LOI, including, without limitation, the negotiation and execution of Definitive
Agreements.

     

    2.10                      Counterparts.  This
LOI may be executed and delivered by the Parties (in original form or by
facsimile or emailed pdf scan) in counterparts, each of which shall be deemed an
original instrument, but all of which together shall constitute the same
instrument, provided that this LOI shall not be effective until each Party has
executed and delivered a counterpart.

     

    2.11                      Entire
Agreement.  This LOI constitutes the entire understanding among
the Parties with respect to the subject matter hereof, superseding all
negotiations, prior discussions and prior agreements and understandings relating
to such subject matter.

     

    2.12                      Amendments.  This
LOI may not be amended nor any rights hereunder waived except by written mutual
agreement of the Parties.

     

    2.13                      Assignment.  This
LOI and the rights and obligations herein may not be assigned by a Party, in
whole or in part, without the prior written consent of the other
Party.

     

    2.14                      No Third Party
Beneficiaries.  This LOI is intended to benefit only the
Parties hereto and their respective permitted successors and
assigns.

     

    2.15           Notices.  All
notices and communications with respect to this LOI shall be in
writing.  Any communication or delivery hereunder shall be deemed to
have been duly made and the receiving Party charged with notice (i) if
personally delivered, when received, (ii) if sent by telecopy or facsimile
transmission, on the first business day on or after which such facsimile is
successfully transmitted and received, (iii) if mailed, three business days
after mailing, certified mail, return receipt requested, or (iv) if sent by
overnight courier, the first business day on or after such notice is sent by
overnight courier.

    


    All
notices shall be addressed as follows:

    


    If to
REPSOL: Attn. Didier Lluch, West Africa Exploration Director, Repsol
Exploración, S.A., Paseo de la Castellana 280, 4, 28046 Madrid, Tel: +34
91.756.61.06.



    
      
         


      

      
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    If to
HDY-SCS: Attn: Ray Leonard, President and Chief Executive Officer, Hyperdynamics
Corporation, One Sugar Creek Center Blvd., Suite 125, Sugar Land, Texas 77478,
USA Telephone +1 713.353.9400, Facsimile +1 713.353.9421.

    


    Any Party
may, by written notice so delivered to the other Party, change the address or
individual to which delivery shall thereafter be made.

    


    2.16           Compliance With U.S. and
International Laws Governing Sanctions and Corrupt Practices.
Each Party represents that, to the best of its knowledge and belief, it
is not subject to economic or other sanctions imposed under the laws
of the United States or treaties or conventions of the United Nations
and is eligible to receive exports from the United States under the laws of
the United States.

     

    


     

    [Execution
Page Follows]


    
      
         


      

      
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    The
Parties have executed this AGREEMENT FOR EXCLUSIVE DEALING AND
LETTER OF INTENT as of the Effective Date.

     

    


     

    
      
        	
                HYPERDYNAMICS
      CORPORATION

              	
                SCS
      Corporation

              
	 
      	 
      
	 
      	 
      
	 
      	 
      
	
                By:  /s/ Ray
      Leonard                                              
      

              	
                      
                  By:  /s/ Ray
      Leonard                                              
      

                

              
	
                       Ray
      Leonard

              	 
      
	
                       President
      and Chief Executive Officer

              	 
      


      

    

    


     

    REPSOL
EXPLORACIÓN, S.A.

     

    By:   /s/ Marcus E.
Mazetic                                   


    Printed
Name:   Marcus E.
Mazetic                      


    Title:  Exploration
Director                                    


     

    
      
         


      

      
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    EXHIBIT
“A”

     

    Essential
Commercial Terms

     

    This Exhibit sets forth certain
essential business terms for a prospective transaction which is being considered
by the Parties.  These terms are set forth solely for the purpose of
furthering discussions between the Parties, and is not intended to, and shall
not be construed to, create any legally binding obligation enforceable against
either Party.

     

    
      	
              Affiliate

            	
              shall
      mean any person which (a) controls either directly or indirectly a Party,
      or (b) is controlled directly or indirectly by such Party, or (c) is
      directly or indirectly controlled by a person which directly or indirectly
      controls such Party, for which purpose “control” means the right to
      exercise, directly or indirectly, fifty percent (50%) or more of the
      voting rights in the appointment of the directors or similar
      representation of a person, where “person” means any individual,
      corporation, partnership, limited liability company or other legally
      recognized entity.

            


    

     

    


     

    
      	
              Assignor:

            	
              SCS
      Corporation (SCS)- Hyperdinamics Corporation
  (HDY)

            


    

     

    
      	
              Assignee:

            	
              Repsol
      Exploración, S.A.

            


    

     

    
      	
                    
                REPSOL

              

            	
               

            


    

    
      	
                    
                Participating

              

            	
               

            


    

    
      	
              Interest:

            	
              An undivided thirty
      seven percent (37%) Participating interest in the PSC and Contract Area to
      be assigned by the PSC Assignment contemporaneously with execution of the
      JOA, subject to government and third party approvals and consents as
      required, Assignee to be designated Operator upon full payment of
      Consideration for Assignment of Participating Interest set out below and
      subject to government and third party approvals and consents as
      required.

            


    

    


    
      Contract

    

    
      	
               Area:

            	
              Contract
      Area, as such term is defined in the PSC, it being understood and
      acknowledged that such Contract Area is subject to variation pursuant to
      the MoU.

            


    

    


    
      Consideration
for

    

    
      Assignment
of

    

    
      Participating

    

    
      	
              Interest:

            	
              US$31,500,000
      payable upon execution of the PSC Clarification and its entry into full
      legal effect pursuant to the laws of the Republic of
    Guinea.

            


    


    
      
         


      

      
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    Seismic

    Acquisition

    Payments, consist
of:

    


    Repsol to
pay 37% share of BOS seismic program upon signing of Definitive Agreements. This
will include an immediate payment of 37% of payments already made by
Hyperdynamics at time of signing (currently estimated to be net $1.63 MM) and
subsequently 37% of billings of $2.8 MM upon Hyperdynamics receiving the second
and third tranches of 3000 km. Repsol to have the same rights as Hyperdynamics
regarding the data, including cost recovery and resale.

    


    
      	
              Definitive
      Agreements:

            	
              SPA
      to be negotiated and executed by HDY/SCS and REPSOL (or its nominated
      Affiliated Company), in respect of the acquisition by REPSOL of the REPSOL
      Participating Interest as more particularly described
    below.

            


    

    


    PSC
Assignment assigning the REPSOL Participating Interest to REPSOL, such that
REPSOL becomes a party to the PSC, to be negotiated and executed by SCS, REPSOL
(or its nominated Affiliated Company), any third parties to the PSC, and the
Government of the Republic of Guinea, or such alternative means of effecting and
documenting the transfer of the REPSOL Participating Interest to REPSOL as may
be mutually agreed in writing by HDY,/SCS and REPSOL.

    


    JOA
(including Accounting Procedure) in respect of the PSC and Contract Area to be
negotiated and executed by SCS, REPSOL (or its nominated Affiliated Company) and
any third party co-venturers.

    


    The
foregoing agreements constitute the “Definitive Agreements”.

    


    
      	
              PSC Clarification,

            	
              to
      be negotiated by HDY-SCS, REPSOL (or its nominated Affiliated Company),
      any third party co-venturers, and the Government of the Republic of Guinea
      incorporating, inter
      alia, the relevant terms of, and superseding, the MoU, and to be
      executed by all parties to the PSC.

            


    

    


    
      Right
of

    

    
      	
              First
      Refusal:

            	
              The
      right of first refusal applicable to SCS pursuant to Article 2.3 of the
      MoU shall be passed on to REPSOL pro rata to the REPSOL Participating
      Interest.

            


    

     

    
      
         


      

      
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              Indemnity:

            	
              HDY-SCS
      shall indemnify and hold harmless REPSOL in respect of any and all claims
      and liabilities in respect of the period prior to the date of approval by
      the Republic of Guinea of the assignment to REPSOL of the REPSOL
      Participating Interest.

            


    

    


    
      Conditions

    

    
      	
              Precedent:

            	
              All
      necessary approvals and consents by the Government of the Republic of
      Guinea and relevant third parties for the acquisition of the Participating
      Interest by REPSOL including, without limitation, approval of the
      Definitive Agreements, the PSC Clarification, and any and all other
      ancillary documents of transfer and
recordation.

            


    

    


    
      	
              Working
    day

            	
              means
      a Day (other than a Saturday or Sunday) on which banks in Guinea Conakry
      and in Madrid, Spain are customarily open for
  business.

            


    


    
      
         


      

      
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