Document:

ex4_2.htm

    
      

    

    
      
        	
                Exhibit
      4.2

              	
                Warrant.

              

      

      

       

      

       

      FORM OF
WARRANT

       

      THE
SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT.

       

       

      HYPERDYNAMICS
CORPORATION

       

       

      Warrant
To Purchase Common Stock

       

      
        	
                Warrant
      No.: HDY-2-1

              	
                Number
      of Shares:

              	 	
                550,000

              
	 
      	
                Warrant
      Exercise Price:

              	 	
                $2.00

              
	 
      	
                Expiration
      Date:

              	 	
                February
      6, 2013

              
	 
      	 
      	 	 
      
	
                Date
      of Issuance: February 6, 2008

              	 
      	 	 
      

      

      

      Hyperdynamics
Corporation, a Delaware corporation (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, YA Global Investments, L.P. (the “Holder”), the
registered Holder hereof or its permitted assigns, is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but not after
11:59 P.M. Eastern Time on the Expiration Date (as defined herein) up to
five hundred and fifty thousand (550,000) fully paid and nonassessable shares of
Common Stock (as defined herein) of the Company (the “Warrant Shares”) at
the exercise price per share provided in Section 1(b) below or as
subsequently adjusted; provided, however, that in no event shall the Holder be
entitled to exercise this Warrant for a number of Warrant Shares in excess of
that number of Warrant Shares which, upon giving effect to such exercise, would
cause the aggregate number of shares of Common Stock beneficially owned by the
Holder and its affiliates to exceed 4.99% of the outstanding shares of the
Common Stock following such exercise, except within sixty (60) days of the
Expiration Date (however, such restriction may be waived by Holder (but only as
to itself and not to any other Holder) upon not less than sixty-five (65) days
prior notice to the Company).  For purposes of the foregoing proviso,
the aggregate number of shares of Common Stock beneficially owned by the Holder
and its affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which the determination of such
proviso is being made, but shall exclude shares of Common Stock which would be
issuable upon (i) exercise of the remaining, unexercised Warrants
beneficially owned by the Holder and its affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company beneficially owned by the Holder and its affiliates (including,
without limitation, any convertible notes or preferred stock) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein.  Except as set forth in the preceding sentence, for purposes
of this paragraph, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended.  For
purposes of this Warrant, in determining the number of outstanding shares of
Common Stock the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (1) the Company’s most recent Form 10-Q or Form 10-K, as
the case may be, (2) a more recent public announcement by the Company or (3) any
other notice by the Company or its transfer agent setting forth the number of
shares of Common Stock outstanding.  Upon the written request of any
Holder, the Company shall promptly, but in no event later than one (1) Business
Day following the receipt of such notice, confirm in writing to the Holder the
number of shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the exercise of Warrants (as defined below) by the Holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      Section
1.

       

      (a)  This
Warrant is issued pursuant to the Securities Purchase Agreement (“Securities Purchase
Agreement”) dated the date hereof between the Company and the Buyers
listed on Schedule I thereto or issued in exchange or substitution thereafter or
replacement thereof.  Each Capitalized term used, and not otherwise
defined herein, shall have the meaning ascribed thereto in the Securities
Purchase Agreement.

       

      (b)  Definitions.  The
following words and terms as used in this Warrant shall have the following
meanings:

       

      (i)     
      “Approved Stock Plan”
means a stock option plan that has been approved by the Board of Directors of
the Company prior to the date of the Securities Purchase Agreement, pursuant to
which the Company’s securities may be issued only to any employee, officer,
director, attorney, consultant or vendor for services and/or goods provided to
the Company.

       

      (ii)           
“Business Day”
means any day other than Saturday, Sunday or other day on which commercial banks
in the City of New York are authorized or required by law to remain
closed.

       

      (iii)           “Closing Bid Price”
means the closing bid price of Common Stock as quoted on the Principal Market
(as reported by Bloomberg Financial Markets (“Bloomberg”) through
its “Volume at Price” function).

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      (iv)           “Common Stock” means
(i) the Company’s common stock, par value $0.001per share, and
(ii) any capital stock into which such Common Stock shall have been changed
or any capital stock resulting from a reclassification of such Common
Stock.

       

      (v)           “Event of Default”
means an event of default under the Securities Purchase Agreement or the
Convertible Debentures issued in connection therewith.

       

      (vi)           “Excluded Securities”
means, (a) shares issued or deemed to have been issued by the Company pursuant
to an Approved Stock Plan, (b) shares of Common Stock issued or deemed to be
issued by the Company upon the conversion, exchange or exercise of any right,
option, obligation or security outstanding on the date prior to date of the
Securities Purchase Agreement, provided that the terms of such right, option,
obligation or security are not amended or otherwise modified on or after the
date of the Securities Purchase Agreement, and provided that the conversion
price, exchange price, exercise price or other purchase price is not reduced,
adjusted or otherwise modified and the number of shares of Common Stock issued
or issuable is not increased (whether by operation of, or in accordance with,
the relevant governing documents or otherwise) on or after the date of the
Securities Purchase Agreement,  and (c) the shares of Common
Stock issued or deemed to be issued by the Company upon conversion of the
Convertible Debentures or exercise of the Warrants.

       

      (vii)         “Expiration Date”
means February  5, 2013.

       

      (viii)       
 “Issuance
Date” means the date hereof.

       

      (ix)           “Options” means any
rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities.

       

      (x)           
“Person” means
an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.

       

      (xi)           “Primary Market” means
on any of (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the
Nasdaq Global Select Market, (d) the Nasdaq Global Market, (e) the Nasdaq
Capital Market, or (e) the Over-the-Counter Bulletin Board (“OTCBB”)

       

      (xii)           “Securities Act” means
the Securities Act of 1933, as amended.

       

      (xiii)         “Warrant” means this
Warrant and all Warrants issued in exchange, transfer or replacement
thereof.

       

      (xiv)         “Warrant Exercise
Price” shall be $2.00 or as subsequently adjusted as provided in
Section 8 hereof.

       

      (c)  Other
Definitional Provisions.

       

      (i)            
Except as otherwise specified herein, all references herein (A) to the
Company shall be deemed to include the Company’s successors and (B) to any
applicable law defined or referred to herein shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented from
time to time.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      (ii)           When
used in this Warrant, the words “herein”, “hereof”, and “hereunder” and words of similar import,
shall refer to this Warrant as a whole and not to any provision of this Warrant,
and the words “Section”, “Schedule”, and “Exhibit” shall refer
to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.

       

      (iii)           Whenever
the context so requires, the neuter gender includes the masculine or feminine,
and the singular number includes the plural, and vice versa.

       

      Section
2.               Exercise of
Warrant.

       

      (a)  Subject
to the terms and conditions hereof, this Warrant may be exercised by the Holder
hereof then registered on the books of the Company, pro rata as hereinafter
provided, at any time on any Business Day on or after the opening of business on
such Business Day, commencing with the first day after the date hereof, and
prior to 11:59 P.M. Eastern Time on the Expiration Date (i) by delivery of
a written notice, in the form of the subscription notice attached as Exhibit A hereto (the
“Exercise
Notice”), of the Holder’s election to exercise this Warrant, which notice
shall specify the number of Warrant Shares to be purchased, payment to the
Company of an amount equal to the Warrant Exercise Price(s) applicable to the
Warrant Shares being purchased, multiplied by the number of Warrant
Shares (at the applicable Warrant Exercise Price) as to which this Warrant
is being exercised (plus any applicable issue or transfer taxes) (the
“Aggregate Exercise
Price”) in cash or wire transfer of immediately available funds and the
surrender of this Warrant (or an indemnification undertaking with respect to
this Warrant in the case of its loss, theft or destruction) to a common carrier
for overnight delivery to the Company as soon as practicable following such date
(“Cash Basis”)
or (ii) (x) if this Warrant is being exercised six months after the date hereof,
or (y) if at the time of exercise, the Warrant Shares are not subject to an
effective registration statement or (z) if an Event of Default has occurred, by
delivering an Exercise Notice and in lieu of making payment of the Aggregate
Exercise Price in cash or wire transfer, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to the
following formula (the “Cashless
Exercise”):

       

      
        	
                Net
      Number =

              	
                (A x B) – (A x C)

              
	 
      	
                B

              

      

      

      For
purposes of the foregoing formula:

      

      A = the
total number of Warrant Shares with respect to which this Warrant is then being
exercised.

      

      B = the
Closing Bid Price of the Common Stock on the date of exercise of the
Warrant.

      

      C = the
Warrant Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      In the
event of any exercise of the rights represented by this Warrant in compliance
with this Section 2, the Company shall on or before the fifth (5th)
Business Day following the date of receipt of the Exercise Notice, the Aggregate
Exercise Price and this Warrant (or an indemnification undertaking with respect
to this Warrant in the case of its loss, theft or destruction) and the receipt
of the representations of the Holder specified in Section 6 hereof, if requested
by the Company (the “Exercise Delivery
Documents”), and if the Common Stock is DTC eligible, credit such
aggregate number of shares of Common Stock to which the Holder shall be entitled
to the Holder’s or its designee’s balance account with The Depository Trust
Company; provided, however, if the Holder who submitted the Exercise Notice
requested physical delivery of any or all of the Warrant Shares, or, if the
Common Stock is not DTC eligible  then the Company shall, on or before
the fifth (5th)
Business Day following receipt of the Exercise Delivery Documents, issue and
surrender to a common carrier for overnight delivery to the address specified in
the Exercise Notice, a certificate, registered in the name of the Holder, for
the number of shares of Common Stock to which the Holder shall be entitled
pursuant to such request.  Upon delivery of the Exercise Notice and
Aggregate Exercise Price referred to in clause (i) or (ii) above the Holder
shall be deemed for all corporate purposes to have become the Holder of record
of the Warrant Shares with respect to which this Warrant has been
exercised.  In the case of a dispute as to the determination of the
Warrant Exercise Price, the Closing Bid Price or the arithmetic calculation of
the Warrant Shares, the Company shall promptly issue to the Holder the number of
Warrant Shares that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the Holder via facsimile within one (1) Business
Day of receipt of the Holder’s Exercise Notice.

       

      (b)  If
the Holder and the Company are unable to agree upon the determination of the
Warrant Exercise Price or arithmetic calculation of the Warrant Shares within
one (1) day of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall immediately submit via facsimile
(i) the disputed determination of the Warrant Exercise Price or the Closing Bid
Price to an independent, reputable investment banking firm or (ii) the disputed
arithmetic calculation of the Warrant Shares to its independent, outside
accountant.  The Company shall cause the investment banking firm or
the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
forty-eight (48) hours from the time it receives the disputed determinations or
calculations.  Such investment banking firm’s or accountant’s
determination or calculation, as the case may be, shall be deemed conclusive
absent manifest error.

       

      (c)  Unless
the rights represented by this Warrant shall have expired or shall have been
fully exercised, the Company shall, as soon as practicable and in no event later
than five (5) Business Days after any exercise and at its own expense, issue a
new Warrant identical in all respects to this Warrant exercised except it shall
represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the number
of Warrant Shares with respect to which such Warrant is exercised.

       

      (d)  No
fractional Warrant Shares are to be issued upon any pro rata exercise of this
Warrant, but rather the number of Warrant Shares issued upon such exercise of
this Warrant shall be rounded up or down to the nearest whole
number.

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      (e)  If
the Company or its Transfer Agent shall fail for any reason or for no reason to
issue to the Holder within ten (10) days of receipt of the Exercise
Delivery Documents, a certificate for the number of Warrant Shares to which the
Holder is entitled or to credit the Holder’s balance account with The Depository
Trust Company for such number of Warrant Shares to which the Holder is entitled
upon the Holder’s exercise of this Warrant, the Company shall, in addition to
any other remedies under this Warrant or otherwise available to the Holder, pay
as additional damages in cash to the Holder on each day the issuance of such
certificate for Warrant Shares is not timely effected an amount equal to 0.025%
of the product of (A) the sum of the number of Warrant Shares not issued to the
Holder on a timely basis and to which the Holder is entitled, and (B) the
Closing Bid Price of the Common Stock for the trading day immediately preceding
the last possible date which the Company could have issued such Common Stock to
the Holder without violating this Section 2.

       

      (f)  If
within ten (10) days after the Company’s receipt of the Exercise Delivery
Documents, the Company fails to deliver a new Warrant to the Holder for the
number of Warrant Shares to which the Holder is entitled pursuant to Section 2
hereof, then, in addition to any other available remedies under this Warrant, or
otherwise available to the Holder, the Company shall pay as additional damages
in cash to the Holder on each day after such tenth (10th) day
that such delivery of such new Warrant is not timely effected in an amount equal
to 0.25% of the product of (A) the number of Warrant Shares represented by
the portion of this Warrant which is not being exercised and (B) the
Closing Bid Price of the Common Stock for the trading day immediately preceding
the last possible date which the Company could have issued such Warrant to the
Holder without violating this Section 2.

       

      (g)  The
Company may force the Holder to exercise this Warrant pursuant to this Section
2, by delivering a written notice (a “Redemption Notice”)
to the Holder if the following conditions have been met:

       

      (i)         
  A registration statement on Form S-1 or S-3 covering the resale of
the Warrant Shares has been filed with the SEC and is in effect,
and

       

      (ii)           The
closing bid price of the Common Stock has exceeded an amount equal to three (3)
times the Warrant Exercise Price for the ten (10) consecutive trading days prior
to the date the Redemption Notice was delivered;

       

      provided, however that the
Holder will not be required to exercise the Warrant pursuant to this Section
2(g) for a dollar amount that exceeds 1/5 of the dollar volume of the Common
Stock in the twenty (20) consecutive days prior to the date on which the
Redemption Notice was delivered.  Upon receipt of the Redemption
Notice, the Holder shall have five (5) days to exercise this
Warrant.  The number of Warrant Shares the Company is forcing the
Holder to purchase pursuant to this Section 2(g) shall be reduced, dollar for
dollar, by any amounts exercised by the Holder pursuant to any warrant for any
shares of capital stock of the Company.

      

      (h)  Principal Market
Regulation.  The Company shall not be obligated to issue any
shares of Common Stock upon conversion of the Notes or exercise of the Warrants
if the issuance of such shares of Common Stock would cause the Company to breach
its obligations under the rules or regulations of the American Stock Exchange
(the “Exchange
Cap”), except that such limitation shall not apply in the event that the
Company (A) obtains the approval of its stockholders as required by the
applicable rules of the American Stock Exchange for issuances of Common Stock in
excess of such amount or (B) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the Holder.  Until such approval or written
opinion is obtained, the Company shall not issue to the Holder in the aggregate,
upon conversion or exercise or otherwise, as applicable, of Notes or Warrants,
or Commitment Shares, shares of Common Stock in an amount greater than the
Exchange Cap.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      Section
3.               Covenants as to Common
Stock.  The Company hereby covenants and agrees as
follows:

       

      (a)  This
Warrant is, and any Warrants issued in substitution for or replacement of this
Warrant will upon issuance be, duly authorized and validly issued.

       

      (b)  All
Warrant Shares which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issue thereof and to the
extent possible, in accordance with Section 3(g) hereof, validly
issued,.

       

      (c)  During
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized and reserved at least one hundred
percent (100%) of the number of shares of Common Stock needed to provide for the
exercise of the rights then represented by this Warrant and the par value of
said shares will at all times be less than or equal to the applicable Warrant
Exercise Price.  If at any time the Company does not have a sufficient
number of shares of Common Stock authorized and available, then the Company
shall call and hold a special meeting of its stockholders within sixty (60)
days of that time for the sole purpose of increasing the number of authorized
shares of Common Stock.

       

      (d)  If
at any time after the date hereof the Company shall file a registration
statement, the Company shall include the Warrant Shares issuable to the Holder,
pursuant to the terms of this Warrant and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all Warrant Shares
from time to time issuable upon the exercise of this Warrant; and the Company
shall so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any other shares
of capital stock of the Company issuable upon the exercise of this Warrant if
and so long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.

       

      (e)  The
Company will not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the Holder in order to protect the exercise privilege
of the Holder against dilution or other impairment, consistent with the tenor
and purpose of this Warrant.  The Company will not increase the par
value of any shares of Common Stock receivable upon the exercise of this Warrant
above the Warrant Exercise Price then in effect, and (ii) will take all
such actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant.

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      (f)  This
Warrant will be binding upon any entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s
assets.

       

      (g)  As
promptly as possible, but in no event later than 5 p.m. New York City time on
February 12, 2008, the Company shall file an application for the listing on the
American Stock Exchange of five hundred and fifty thousand (550,000) shares of
Common Stock to be issuable upon exercise of this Warrant (such shares, the
“Listed Warrant
Shares”) and upon notification that such Listed Warrant Shares have been
listed will use its best efforts to secure and maintain such listing; provided, however, that any
Listed Warrant Shares that have not been issued may be issued to the Holder upon
conversion of the Notes (as defined in the Securities Purchase Agreement)
notwithstanding any designation in the listing application or this Section 3(g)
as Warrant Shares.  If upon exercise of the Warrants there are an
insufficient number of unissued Listed Shares (as defined in the Securities
Purchase Agreement) for the Company to satisfy such exercise, the Company shall
as promptly as possible secure the listing of an additional number of shares of
Common Stock necessary to satisfy such exercise.

       

      Section
4.               Taxes.  The
Company shall pay any and all taxes, except any applicable withholding, which
may be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.

       

      Section
5.               Warrant Holder Not Deemed a
Stockholder.  Except as otherwise specifically provided herein,
no Holder, as such, of this Warrant shall be entitled to vote or receive
dividends or be deemed the holder of shares of capital stock of the Company for
any purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance to
the Holder of the Warrant Shares which he or she is then entitled to receive
upon the due exercise of this Warrant.  In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company.  Notwithstanding this Section 5, the
Company will provide the Holder with copies of the same notices and other
information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.

       

      Section
6.               Representations of
Holder.  The Holder, by the acceptance hereof, represents that
it is acquiring this Warrant and the Warrant Shares for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution of this Warrant or the Warrant Shares, except
pursuant to sales registered or exempted under the Securities Act; provided,
however, that by making the representations herein, the Holder does not agree to
hold this Warrant or any of the Warrant Shares for any minimum or other specific
term and reserves the right to dispose of this Warrant and the Warrant Shares at
any time in accordance with or pursuant to a registration statement or an
exemption under the Securities Act.  The Holder further represents, by
acceptance hereof, that, as of this date, the Holder is an “accredited investor”
as such term is defined in Rule 501(a)(1) of Regulation D promulgated by
the Securities and Exchange Commission under the Securities Act (an “Accredited
Investor”).  Upon exercise of this Warrant, the Holder shall,
if requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
Holder’s own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that the Holder is an
Accredited Investor.  If the Holder cannot make such representations
because they would be factually incorrect, it shall be a condition to the
Holder’s exercise of this Warrant that the Company receive such other
representations as the Company considers reasonably necessary to assure the
Company that the issuance of its securities upon exercise of this Warrant shall
not violate any United States or state securities laws.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      Section
7.               Ownership and
Transfer.

       

      (a)  The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the Holder hereof), a
register for this Warrant, in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as the
name and address of each transferee.  The Company may treat the person
in whose name any Warrant is registered on the register as the owner and Holder
thereof for all purposes, notwithstanding any notice to the contrary, but in all
events recognizing any transfers made in accordance with the terms of this
Warrant.

       

      Section
8.               Adjustment of Warrant
Exercise Price and Number of Shares.  The Warrant Exercise
Price and the number of shares of Common Stock issuable upon exercise of this
Warrant shall be adjusted from time to time as follows:

       

      (a)  Adjustment of Warrant
Exercise Price and Number of Shares upon Issuance of Common
Stock.  If and whenever on or after the Issuance Date of this
Warrant, the Company issues or sells, or is deemed to have issued or sold, any
shares of Common Stock (other than Excluded Securities) for a per share
less than a price equal to the Warrant Exercise Price in effect immediately
prior to such issuance or sale, then immediately after such issue or sale the
Warrant Exercise Price then in effect shall be reduced.  Upon each
such adjustment of the Warrant Exercise Price hereunder, the number of Warrant
Shares issuable upon exercise of this Warrant shall be adjusted to the number of
shares determined by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares issuable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price.

       

      (b)  Effect on Warrant Exercise
Price of Certain Events.  For purposes of determining the
adjusted Warrant Exercise Price under Section 8(a) above, the following shall be
applicable:

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      

       

      (i)           
 Issuance of
Options.  If after the date hereof, the Company in any manner
grants any Options and the lowest price per share for which one share of Common
Stock is issuable upon the exercise of any such Option or upon conversion or
exchange of any convertible securities issuable upon exercise of any such Option
is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for such price per
share.  For purposes of this Section 8(b)(i), the lowest price per
share for which one share of Common Stock is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities shall be
equal to the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon the
granting or sale of the Option, upon exercise of the Option or upon conversion
or exchange of any convertible security issuable upon exercise of such
Option.  No further adjustment of the Warrant Exercise Price shall be
made upon the actual issuance of such Common Stock or of such convertible
securities upon the exercise of such Options or upon the actual issuance of such
Common Stock upon conversion or exchange of such convertible
securities.

       

      (ii)       
    Issuance of Convertible
Securities.  If the Company in any manner issues or sells any
convertible securities and the lowest price per share for which one share of
Common Stock is issuable upon the conversion or exchange thereof is less than
the Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issuance or sale of such convertible securities for such price per
share.  For the purposes of this Section 8(b)(ii), the lowest
price per share for which one share of Common Stock is issuable upon such
conversion or exchange shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the convertible security and
upon conversion or exchange of such convertible security.  No further
adjustment of the Warrant Exercise Price shall be made upon the actual issuance
of such Common Stock upon conversion or exchange of such convertible securities,
and if any such issue or sale of such convertible securities is made upon
exercise of any Options for which adjustment of the Warrant Exercise Price had
been or are to be made pursuant to other provisions of this Section 8(b), no
further adjustment of the Warrant Exercise Price shall be made by reason of such
issue or sale.

       

      (iii)           Change in Option Price or
Rate of Conversion.  If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion or exchange of any convertible securities, or the rate at which any
convertible securities are convertible into or exchangeable for Common Stock
changes at any time, the Warrant Exercise Price in effect at the time of such
change shall be adjusted to the Warrant Exercise Price which would have been in
effect at such time had such Options or convertible securities provided for such
changed purchase price, additional consideration or changed conversion rate, as
the case may be, at the time initially granted, issued or sold and the number of
Warrant Shares issuable upon exercise of this Warrant shall be correspondingly
readjusted.  For purposes of this Section 8(b)(iii), if the terms of
any Option or convertible security that was outstanding as of the Issuance Date
of this Warrant are changed in the manner described in the immediately preceding
sentence, then such Option or convertible security and the Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such change.  No adjustment pursuant to
this Section 8(b) shall be made if such adjustment would result in an
increase of the Warrant Exercise Price then in effect.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      (iv)           Calculation of Consideration
Received.  If any Common Stock, Options or convertible
securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefore will be deemed to be the net amount
received by the Company therefore.  If any Common Stock, Options or
convertible securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the market price of such securities on the date of receipt of such
securities.  If any Common Stock, Options or convertible securities
are issued to the owners of the non-surviving entity in connection with any
merger in which the Company is the surviving entity, the amount of consideration
therefore will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such Common
Stock, Options or convertible securities, as the case may be.  The
fair value of any consideration other than cash or securities will be determined
jointly by the Company and the holders of Warrants representing at least
two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants then
outstanding.  If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring valuation (the
“Valuation
Event”), the fair value of such consideration will be determined within
five (5) Business Days after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the holders of Warrants representing at least
two-thirds (b) of the Warrant Shares issuable upon exercise of the Warrants then
outstanding.  The determination of such appraiser shall be final and
binding upon all parties and the fees and expenses of such appraiser shall be
borne jointly by the Company and the holders of Warrants.

       

      (v)         
  Integrated
Transactions.  In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $.01.

       

      (vi)           Treasury
Shares.  The number of shares of Common Stock outstanding at
any given time does not include shares owned or held by or for the account of
the Company, and the disposition of any shares so owned or held will be
considered an issue or sale of Common Stock.

       

      (vii)          Record
Date.  If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (1) to receive a dividend or other
distribution payable in Common Stock, Options or in convertible securities or
(2) to subscribe for or purchase Common Stock, Options or convertible
securities, then such record date will be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

       

      (c)  Adjustment of Warrant
Exercise Price upon Subdivision or Combination of Common
Stock.  If the Company at any time after the date of issuance
of this Warrant subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding shares of Common Stock into
a greater number of shares, any Warrant Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of
shares of Common Stock obtainable upon exercise of this Warrant will be
proportionately increased.  If the Company at any time after the date
of issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately
decreased.  Any adjustment under this Section 8(c) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      (d)  Distribution of
Assets.  If the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
Common Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a “Distribution”), at
any time after the issuance of this Warrant, then, in each such
case:

       

      (i)        
   any Warrant Exercise Price in effect immediately prior to the
close of business on the record date fixed for the determination of holders of
Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Warrant Exercise Price by
a fraction of which (A) the numerator shall be the Closing Sale Price of the
Common Stock on the trading day immediately preceding such record date minus the
value of the Distribution (as determined in good faith by the Company’s Board of
Directors) applicable to one share of Common Stock, and (B) the denominator
shall be the Closing Sale Price of the Common Stock on the trading day
immediately preceding such record date; and

       

      (ii)      
     either (A) the number of Warrant Shares obtainable
upon exercise of this Warrant shall be increased to a number of shares equal to
the number of shares of Common Stock obtainable immediately prior to the close
of business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding clause (i), or (B) in the event
that the Distribution is of common stock of a company whose common stock is
traded on a national securities exchange or a national automated quotation
system, then the Holder shall receive an additional warrant to purchase Common
Stock, the terms of which shall be identical to those of this Warrant, except
that such warrant shall be exercisable into the amount of the assets that would
have been payable to the Holder pursuant to the Distribution had the Holder
exercised this Warrant immediately prior to such record date and with an
exercise price equal to the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding clause (i).

       

      (e)  Certain
Events.  If any event occurs of the type contemplated by the
provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Company’s Board of Directors will make an appropriate adjustment in the Warrant
Exercise Price and the number of shares of Common Stock obtainable upon exercise
of this Warrant so as to protect the rights of the holders of the Warrants;
provided, except as set forth in section 8(c),that no such adjustment pursuant
to this Section 8(e) will increase the Warrant Exercise Price or decrease the
number of shares of Common Stock obtainable as otherwise determined pursuant to
this Section 8.

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      (f)  Voluntary Adjustments By
Company.  The Company may at any time during the term of this
Warrant reduce the then current Exercise Price to any amount and for any period
of time deemed appropriate by the Board of Directors of the
Company.

       

      (g)  Notices.

       

      (i)             Immediately
upon any adjustment of the Warrant Exercise Price, the Company will give written
notice thereof to the Holder, setting forth in reasonable detail, and
certifying, the calculation of such adjustment.

       

      (ii)           The
Company will give written notice to the Holder at least ten (10) days prior to
the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock or
(C) for determining rights to vote with respect to any Organic Change (as
defined below), dissolution or liquidation, provided that such information shall
be made known to the public prior to or in conjunction with such notice being
provided to the Holder.

       

      (iii)          The
Company will also give written notice to the Holder at least ten (10) days prior
to the date on which any Organic Change, dissolution or liquidation will take
place, provided that such information shall be made known to the public prior to
or in conjunction with such notice being provided to the Holder.

       

      Section
9.               Purchase Rights;
Reorganization, Reclassification, Consolidation, Merger or
Sale.

       

      (a)  In
addition to any adjustments pursuant to Section 8 above, if at any time the
Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issue or sale of such Purchase
Rights.

       

      (b)  Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company’s assets to another Person or other
transaction in each case which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock is
referred to herein as an “Organic
Change.”  Prior to the consummation of any (i) sale of all or
substantially all of the Company’s assets to an acquiring Person or (ii) other
Organic Change following which the Company is not a surviving entity, the
Company will secure from the Person purchasing such assets or the successor
resulting from such Organic Change (in each case, the “Acquiring Entity”) a
written agreement (in form and substance satisfactory to the Holders of Warrants
representing at least two-thirds (iii) of the Warrant Shares issuable upon
exercise of the Warrants then outstanding) to deliver to each Holder of Warrants
in exchange for such Warrants, a security of the Acquiring Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant
and satisfactory to the Holders of the Warrants (including an adjusted warrant
exercise price equal to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and exercisable for a corresponding number
of shares of Common Stock acquirable and receivable upon exercise of the
Warrants without regard to any limitations on exercise, if the value so
reflected is less than any Applicable Warrant Exercise Price immediately prior
to such consolidation, merger or sale).  Prior to the consummation of
any other Organic Change, the Company shall make appropriate provision (in form
and substance satisfactory to the Holders of Warrants representing a
majority of the
Warrant Shares issuable upon exercise of the Warrants then outstanding) to
insure that each of the holders of the Warrants will thereafter have the right
to acquire and receive in lieu of or in addition to (as the case may be) the
Warrant Shares immediately theretofore issuable and receivable upon the exercise
of the Holder’s Warrants (without regard to any limitations on exercise),
such shares of stock, securities or assets that would have been issued or
payable in such Organic Change with respect to or in exchange for the number of
Warrant Shares which would have been issuable and receivable upon the exercise
of the Holder’s Warrant as of the date of such Organic Change (without taking
into account any limitations or restrictions on the exercisability of this
Warrant).

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      Section
10.             Lost, Stolen, Mutilated or
Destroyed Warrant.  If this Warrant is lost, stolen, mutilated
or destroyed, the Company shall promptly, on receipt of an indemnification
undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new
Warrant of like denomination and tenor as this Warrant so lost, stolen,
mutilated or destroyed.

       

      Section
11.         
   Notice.  Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Warrant 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 receipt is received by the sending party transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business 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 Holder:

              	
                YA
      Global Investments, L.P.

              
	 
      	
                101
      Hudson Street – Suite 3700

              
	 
      	
                Jersey
      City, NJ  07302

              
	 
      	
                Attention:                      Mark
      A. Angelo

              
	 
      	
                Telephone:                 
        (201) 985-8300

              
	 
      	
                Facsimile:                  
          (201) 985-8266

              
	 
      	 
      
	
                With
      Copy to:

              	
                David
      Gonzalez, Esq.

              
	 
      	
                101
      Hudson Street – Suite 3700

              
	 
      	
                Jersey
      City, NJ 07302

              
	 
      	
                Telephone:                  
       (201) 985-8300

              
	 
      	
                Facsimile:                 
           (201) 985-8266

              
	 
      	 
      
	
                If
      to the Company, to:

              	
                Hyperdynamics
      Corporation

              
	 
      	
                One
      Sugar Creek Center Boulevard, Suite 125

              
	 
      	
                Sugar
      Land, Texas 77478

              
	 
      	
                Attention:                      Kent
      P. Watts

              
	 
      	
                Telephone:                    (713)
      353-9400

              
	 
      	
                Facsimile:               
             (713)
353-9421

              
	 
      	 
      
	
                With
      a copy to:

              	
                Joel
      Seidner, Esq.

              
	 
      	
                880
      Tully Road #50

              
	 
      	
                Houston,
      TX 77079

              
	 
      	
                Telephone:                    (281)
      493-1311

              
	 
      	
                Facsimile:                
            (281)
  667-3292

              

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      If to the
Holder, to it at the address and facsimile number set forth in this Section 11,
or at such other address and facsimile as shall be delivered to the Company upon
the issuance or transfer of this Warrant.  Each party shall provide
five days’ prior written notice to the other party of any change in address or
facsimile number.  Written confirmation of receipt (A) given by
the recipient of such notice, consent, facsimile, waiver or other communication,
(or (B) provided by a nationally recognized overnight delivery service
shall be rebuttable evidence of personal service, receipt by facsimile or
receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

       

      Section
12.            Date.  The
date of this Warrant is set forth on page 1 hereof.  This Warrant,
in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Section 8(b) shall continue in full
force and effect after such date as to any Warrant Shares or other securities
issued upon the exercise of this Warrant.

       

      Section
13.            Amendment and
Waiver.  Except as otherwise provided herein, the provisions of
the Warrants may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the holders of Warrants
representing at least two-thirds of the Warrant Shares issuable upon exercise of
the Warrants then outstanding; provided that, except for Section 8(d), no such
action may increase the Warrant Exercise Price or decrease the number of shares
or class of stock obtainable upon exercise of any Warrant without the written
consent of the Holder of such Warrant.

       

      Section
14.            Descriptive Headings;
Governing Law.  The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and do
not constitute a part of this Warrant.  The corporate laws of the
State of New Jersey shall govern all issues concerning the relative rights of
the Company and its stockholders.  All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New Jersey, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New Jersey or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New
Jersey.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Hudson County and the
United States District Court for the District of New Jersey, for the
adjudication of any dispute hereunder or in connection herewith or therewith, 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.

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      Section
15.           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.

       

      

      REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      IN WITNESS WHEREOF, Company
has caused this Warrant to be signed as of the date first set forth
above.

       

      
        	 	
                HYPERDYNAMICS
      CORPORATION

              
	 
      	 
      
	 	 
	 
      	 
      
	 
      	
                By:
      /s/  Kent Watts

              
	 
      	
                Name:  Kent
      Watts

              
	 
      	
                Title:    President
      and CEO

              

      

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

      EXHIBIT A TO
WARRANT

       

      EXERCISE
NOTICE

       

      TO
BE EXECUTED

       

      BY
THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

       

      

       

      The
undersigned Holder hereby exercises the right to purchase ______________ of the
shares of Common Stock (“Warrant Shares”) of
Hyperdynamics Corporation (the “Company”), evidenced
by the attached Warrant (the “Warrant”).  Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

       

       (a)
Payment of Warrant
Exercise Price. The Holder shall pay the Aggregate Exercise Price of
$______________ to the Company in accordance with the terms of the
Warrant.

       

      (b) Delivery of Warrant
Shares.  The Company shall deliver to the Holder _________ Warrant Shares
in accordance with the terms of the Warrant.

       

      

      
        	
                Date:

              	
                ,

              	
                 

              
	 
      	 	 
      
	
                Name
      of Registered Holder

              
	 
      	 	 
      
	
                By:

              	 	 
      
	
                Name:

              	 	 
      
	
                Title:

              	 	 
      

      

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

       

      EXHIBIT B TO
WARRANT

       

      FORM OF WARRANT
POWER

       

      FOR VALUE RECEIVED, the
undersigned does hereby assign and transfer to ________________, Federal
Identification No. __________, a warrant to purchase ____________ shares of
the capital stock of Hyperdynamics Corporation represented by warrant
certificate no. _____, standing in the name of the undersigned on the books
of said corporation.  The undersigned does hereby irrevocably
constitute and appoint ______________, attorney to transfer the warrants of said
corporation, with full power of substitution in the premises.

       

      
        	
                Dated:

              	 
      	 	 
      
	 
      	 
      	 	 
      	 
      
	 
      	 
      	 	
                By:

              	 
      
	 
      	 
      	 	
                Name:

              	 
      
	 
      	 
      	 	
                Title:

              	 
      

      

       

       

      19ex10_1.htm

    
      

    

    
      	
              Exhibit
      10.1

            	
              Form
      of Note.

            

    

    

    

    

    NEITHER
THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE.  THESE SECURITIES HAVE BEEN SOLD IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS.

     

    HYPERDYNAMICS
CORPORATION

     

    Form
of Secured Note

     

    
      	
              Issuance
      Date:

            	
              [____________],
      2008

            	
              Original
      Principal Amount:

            	
                      $[_______]

            
	
              No.
      [_______]

            	 
      	 
      	 
      

    

    

    FOR VALUE RECEIVED,
HYPERDYNAMICS CORPORATION, a Delaware corporation (the “Company”), hereby
promises to pay to the order of YA GLOBAL INVESTMENTS, L.P. or registered
assigns (the “Holder”) the amount
set out above as the Original Principal Amount (as reduced pursuant to the terms
hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due,
whether upon the Maturity Date (as defined below), on any Installment Date with
respect to the Installment Amount due on such Installment Date (each, as defined
herein), acceleration, redemption or otherwise (in each case in accordance with
the terms hereof) and to pay interest (“Interest”) on any
outstanding Principal at the applicable Interest Rate from the date set out
above as the Issuance Date (the “Issuance Date”) until
the same becomes due and payable, whether upon any Installment Date or the
Maturity Date or acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof).  This Secured Note (including
all Secured Notes issued in exchange, transfer or replacement hereof, this
“Note”) is one
of an issue of Secured Notes issued pursuant to the Securities Purchase
Agreement (collectively, the “Notes” and such other
Senior Notes, the “Other
Notes”).  Certain capitalized terms used herein are defined in
Section 17.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    GENERAL
TERMS

     

    Payment of
Principal.  On [________], 20081 and each Installment Date thereafter, the
Company shall pay to the Holder [_________________] ($_____) (the “Installment Amount”)
in accordance with Section 3.  On the Maturity Date, the Company shall
pay to the Holder an amount in cash representing all outstanding Principal,
accrued and unpaid Interest.  The “Maturity Date” shall
be [_______, 201_]2, as may be extended at the option of the
Holder (i) in the event that, and for so long as, an Event of Default (as
defined below) shall have occurred and be continuing on the Maturity Date (as
may be extended pursuant to this Section 1) or any event shall have occurred and
be continuing on the Maturity Date (as may be extended pursuant to this Section
1) that with the passage of time and the failure to cure would result in an
Event of Default.  Other than as specifically permitted by this Note,
the Company may not prepay or redeem any portion of the outstanding Principal
without the prior written consent of the Holder.

     

    Interest.  Interest
shall accrue on the outstanding principal balance hereof at an annual rate equal
to twenty percent (20%) (“Interest
Rate”).  Interest shall be calculated on the basis of a 365-day
year and the actual number of days elapsed, to the extent permitted by
applicable law.  Interest that will accrue for the ninety (90) day
period beginning on the date hereof will be paid to the Company on the date
hereof, thereafter Interest hereunder shall be paid on each Installment Date and
on the Maturity Date (or sooner as provided herein) to the Holder or its
assignee in whose name this Note is registered on the records of the Company
regarding registration and transfers of Notes, in accordance with Section
3.

     

    Security.  The
Note is secured by a security interest in all of the assets of the Company and
of Trendsetter Production Company as evidenced by the security agreement of even
date herewith between the Holder, the Company and Trendsetter Production Company
(the “Security
Agreement”).

     

    [Primary
Market.  As promptly as possible, but in no event later than 5
p.m. New York City time on February 12, 2008, the Company shall file an
application for the listing with the American Stock Exchange of one million and
six hundred thousand (1,600,000) shares of Common Stock to be issuable upon
conversion of this Note (such shares, the “Listed Conversion
Shares”) and upon notification that such Listed Conversion Shares have
been listed will use its best efforts to secure and maintain such listing; provided, however, that any
Listed Conversion Shares that have not been issued may be issued to the Holder
upon exercise of the Warrants (as defined in the Securities Purchase Agreement)
notwithstanding any designation in the listing application or this Section 1(d)
as Conversion Shares.  If upon conversion of the Notes there are an
insufficient number of unissued Listed Shares (as defined in the Securities
Purchase Agreement) for the Company to satisfy such exercise, the Company shall
as promptly as possible secure the listing of an additional number of shares of
Common Stock necessary to satisfy such conversion.]

     

     

     

      
        

      

    

    3 To be
the first date of the month that is 180 days after closing.

    4
30 months after date hereof.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    EVENTS OF
DEFAULT.

     

    An “Event of Default”,
wherever used herein, means any one of the following events (whatever the reason
and whether it shall be voluntary or involuntary or effected by operation of law
or pursuant to any judgment, decree or order of any court, or any order, rule or
regulation of any administrative or governmental body):

     

    the
Company’s failure to pay to the Holder any amount of Principal, Interest, or
other amounts when and as due under this Note (including, without limitation,
the Company’s failure to pay any redemption payments or amounts hereunder) or
any other Transaction Document; provided, however, that only
with respect to an Event of Default caused by a failure set forth in this
Section 2(a)(i), the Company will have three (3) Business Days following notice
from Buyers of such non payment to cure such Event of Default;

     

    The
Company or any subsidiary of the Company shall commence, or there shall be
commenced against the Company or any subsidiary of the Company under any
applicable bankruptcy or insolvency laws as now or hereafter in effect or any
successor thereto, or the Company or any subsidiary of the Company commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or any
subsidiary of the Company or there is commenced against the Company or any
subsidiary of the Company any such bankruptcy, insolvency or other proceeding
which remains undismissed for a period of 61 days; or the Company or any
subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Company or any subsidiary of the Company suffers any appointment of any
custodian, private or court appointed receiver or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of sixty one (61) days; or the Company or any subsidiary of the Company
makes a general assignment for the benefit of creditors; or the Company or any
subsidiary of the Company shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or the
Company or any subsidiary of the Company shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its debts
(provided, however, that one on one negotiations of debt repayments will not in
and of themselves be deemed an Event of Default); or the Company or any
subsidiary of the Company shall by any act or failure to act expressly indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate or other action is taken by the Company or any subsidiary of the
Company for the purpose of effecting any of the foregoing;

     

    The
Company or any subsidiary of the Company shall default in any of its
obligations, other than any obligation to a trade creditor, under any other note
or any mortgage, credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may be issued, or by
which there may be secured or evidenced any indebtedness for borrowed money or
money due under any long term leasing or factoring arrangement of the Company or
any subsidiary of the Company in an amount exceeding $250,000, whether such
indebtedness now exists or shall hereafter be created and such default shall
result in such indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable;

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    If the
Common Stock is quoted or listed for trading on any of the following and it
ceases to be so quoted or listed for trading and shall not again be quoted or
listed for trading on any Primary Market within five (5) Trading Days of such
delisting: (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the
Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC
Bulletin Board (“OTCBB”) (each, a “Primary Market”);

     

    The
Company or any subsidiary of the Company shall be a party to any Change of
Control Transaction (as defined in Section 17) unless in connection with such
Change of Control Transaction this Note is retired;

     

    The
Company’s (A) failure to cure a Conversion Failure (as defined herein) by
delivery of the required number of shares of Common Stock within five (5)
Business Days after the applicable Conversion Failure or (B) notice, written or
oral, to any holder of the Notes including by way of public announcement, at any
time, of its intention not to comply with a request for conversion of any Notes
into shares of Common Stock is tendered in accordance with the provision of the
Notes, other than pursuant to Section 4(c).

     

    The
Company shall fail for any reason to deliver the payment in cash pursuant to a
Buy In (as defined herein) within three (3) Business Days after such payment is
due;

     

    The
Company shall fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach or default of any
provision of this Note (except as may be covered by Section 2(a)(i) through
2(a)(viii) hereof) or any Transaction Document (as defined in Section 17) which
is not cured within the time prescribed, or if no time period is prescribed,
then within twenty (20) days after the Company is provided with written notice
thereof from the Holder[;
provided,
however, that the
Company’s failure to comply with the covenants set forth in Section 4(k) of the
Securities Purchase Agreement shall not be deemed an Event of Default for so
long as the Deposit Agreements (as such term is defined in the Security
Agreement, dated February 6, 2008, by and between the Company, the Holder and
certain subsidiaries of the Company) remain in full force and
effect.]

     

    any Event
of Default (as defined in the Other Notes) occurs with respect to any Other
Notes.

     

    During
the time that any portion of this Note is outstanding, if any Event of Default
has occurred, (i) the full unpaid Principal amount of this Note, together with
interest and other amounts owing in respect thereof, to the date of acceleration
shall become immediately due and payable in cash, and (ii) the Holder shall have
the right (but not the obligation) to convert this Note into Common Stock at the
Conversion Price.  The Holder need not provide and the Company hereby
waives any presentment, demand, protest or other notice of any kind, (other than
required notice of conversion) and the Holder may immediately and without
expiration of any grace period enforce any and all of its rights and remedies
hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by Holder at any time prior to payment
hereunder. No such rescission or annulment shall affect any subsequent Event of
Default or impair any right consequent thereon.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    During
the time that any portion of this Note is outstanding, if any Event of Default
has occurred, the Company shall by 4:59 p.m., New York Time, on the Business Day
following learning of the Event of Default, file with the U.S. Securities and
Exchange Commission (the “SEC”) a Current
Report on Form 8-K (the “Default Form 8-K”)
disclosing that (i) an Event of Default has occurred and (ii) in accordance with
their terms, the Notes are convertible, at the option of the Holder, into shares
of Common Stock.

     

    COMPANY
PAYMENTS.

     

    On each
applicable Installment Date, the Company shall pay to the Holder of this Note by
wire transfer of immediately available funds, an amount equal to the accrued and
unpaid interest due on the Note and the Installment Amount, if any, due on such
date.

     

    The
Company at its option shall have the right to redeem (“Optional Redemption”)
a portion or all amounts outstanding under this Note in addition to any
Installment Amount prior to the Maturity Date.  The Company shall pay
an amount equal to the principal amount being redeemed plus a redemption premium
(“Redemption
Premium”) equal to fifteen percent (15%) of the Principal amount being
redeemed, and accrued Interest, (collectively referred to as the “Company Additional
Redemption
Amount”).  In order to make a redemption pursuant to this
Section, the Company shall first provide written notice to the Holder of its
intention to make a redemption (the “Redemption Notice”)
setting forth the amount of Principal it desires to redeem.  After
receipt of the Redemption Notice, if an Event of Default has occurred, the
Holder shall have fifteen (15) Business Days to elect to convert all or any
portion of this Debenture, subject to the limitations set forth in Section
4(b).  On the fourth (4th) Business Day after the Redemption Notice,
the Company shall deliver to the Holder the Company Additional Redemption Amount
with respect to the Principal amount redeemed after giving effect to any
conversions effected during the three (3) Business Day period.

     

    CONVERSION OF
DEBENTURE.  At any time following an Event of Default, this Note
shall be convertible at the option of the Holder, into shares of the Company’s
Common Stock, on the terms and conditions set forth in this Section
4.

     

    Conversion
Right.  Subject to the provisions of Section 4(c), at any time
following an Event of Default, the Holder shall be entitled to convert any
portion of the outstanding and unpaid Conversion Amount (as defined below) into
fully paid and nonassessable shares of Common Stock in accordance with Section
4(b), at the Conversion Rate (as defined below).  The number of shares
of Common Stock issuable upon conversion of any Conversion Amount pursuant to
this Section 4(a) shall be determined by dividing (x) such Conversion Amount by
(y) the Conversion Price (the “Conversion
Rate”).  The Company shall not issue any fraction of a share of
Common Stock upon any conversion.  If the issuance would result in the
issuance of a fraction of a share of Common Stock, the Company shall round such
fraction of a share of Common Stock up to the nearest whole
share.  The Company shall pay any and all transfer, stamp and similar
taxes that may be payable with respect to the issuance and delivery of Common
Stock upon conversion of any Conversion Amount

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Conversion Amount”
means the full unpaid Principal amount of this Note together with accrued
Interest and other amounts owing to the Conversion Date (as defined
below).

     

    “Conversion Price”
means, as of any Conversion Date or other date of determination, the lesser of
(i) Two Dollars ($2.00) or (ii) seventy percent (70%) of the lowest Closing Bid
Price of the Common Stock during the fifteen (15) consecutive Trading Days prior
to the Conversion Date as quoted by Bloomberg, in each case subject to
adjustment as provided herein.

     

    Mechanics of
Conversion.

     

    Optional
Conversion.  Following an Event of Default, to convert the
Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt
on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed
notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company and (B) if required by Section 4(b)(iii), surrender this Note to
a nationally recognized overnight delivery service for delivery to the Company
(or an indemnification undertaking reasonably satisfactory to the Company with
respect to this Note in the case of its loss, theft or
destruction).  On or before 4:59 p.m., New York Time, on the Business
Day following the date of receipt of a the first Conversion Notice the Company
shall file or cause to be filed the Default Form 8-K if such filing has not
already been made.  On or before the third Business Day following the
date of receipt of a Conversion Notice (the “Share Delivery
Date”), the Company shall (X) if legends are not required to be placed on
certificates of Common Stock pursuant to the Securities Purchase Agreement and
provided that the Transfer Agent is participating in the Depository Trust
Company’s (“DTC”) Fast Automated
Securities Transfer Program, credit such aggregate number of shares of Common
Stock to which the Holder shall be entitled to the Holder’s or its designee’s
balance account with DTC through its Deposit Withdrawal Agent Commission system
or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and deliver to the address as specified in
the Conversion Notice, a certificate, registered in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder shall
be entitled which certificates shall not bear any restrictive legends unless
required pursuant to Section 2(g) of the Securities Purchase
Agreement.  If this Note is physically surrendered for conversion and
the outstanding Principal of this Note is greater than the Principal portion of
the Conversion Amount being converted, then the Company shall as soon as
practicable and in no event later than three (3) Business Days after receipt of
this Note and at its own expense, issue and deliver to the holder a new Note
representing the outstanding Principal not converted.  The Person or
Persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the record holder
or holders of such shares of Common Stock upon the transmission of a Conversion
Notice.  In the event of a partial conversion of this Note pursuant
hereto, the principal amount converted shall be deducted from the Installment
Amounts due on subsequent Installment Dates.

     

    Company’s Failure to Timely
Convert.  If within three (3) Trading Days after the Company’s
receipt of the facsimile copy of a Conversion Notice the Company shall fail to
issue and deliver a certificate to the Holder or credit the Holder’s balance
account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon such holder’s conversion of any Conversion Amount (a “Conversion Failure”),
and if on or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) Common Stock to deliver in satisfaction of a sale by
the Holder of Common Stock issuable upon such conversion that the Holder
anticipated receiving from the Company (a “Buy-In”), then the
Company shall, within three (3) Business Days after the Holder’s request and in
the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to
the Holder’s total purchase price (including brokerage commissions and other out
of pocket expenses, if any) for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such Common
Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Common Stock and pay cash
to the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Common Stock, times (B) the Closing
Bid Price on the Conversion Date.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of
any portion of this Note in accordance with the terms hereof, the Holder shall
not be required to physically surrender this Note to the Company unless (A) the
full Conversion Amount represented by this Note is being converted or (B) the
Holder has provided the Company with prior written notice (which notice may be
included in a Conversion Notice) requesting reissuance of this Note upon
physical surrender of this Note.  The Holder and the Company shall
maintain records showing the Principal and Interest converted and the dates of
such conversions or shall use such other method, reasonably satisfactory to the
Holder and the Company, so as not to require physical surrender of this Note
upon conversion.

     

    Limitations on
Conversions.

     

    Beneficial
Ownership.  The Company shall not effect any conversions of
this Note and the Holder shall not have the right to convert any portion of this
Note or receive shares of Common Stock as payment of interest hereunder to the
extent that after giving effect to such conversion or receipt of such interest
payment, the Holder, together with any affiliate thereof, would beneficially own
(as determined in accordance with Section 13(d) of the Exchange Act and the
rules promulgated thereunder) in excess of 4.99% of the number of shares of
Common Stock outstanding immediately after giving effect to such conversion or
receipt of shares as payment of interest.    Since the
Holder will not be obligated to report to the Company the number of shares of
Common Stock it may hold at the time of a conversion hereunder, unless the
conversion at issue would result in the issuance of shares of Common Stock in
excess of 4.99% of the then outstanding shares of Common Stock without regard to
any other shares which may be beneficially owned by the Holder or an affiliate
thereof, the Holder shall have the authority and obligation to determine whether
the restriction contained in this Section will limit any particular conversion
hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the
principal amount of this Note is convertible shall be the responsibility and
obligation of the Holder.  If the Holder has delivered a Conversion
Notice for a principal amount of this Note that, without regard to any other
shares that the Holder or its affiliates may beneficially own, would result in
the issuance in excess of the permitted amount hereunder, the Company shall
notify the Holder of this fact and shall honor the conversion for the maximum
principal amount permitted to be converted on such Conversion Date in accordance
with Section 4(a) and, any principal amount tendered for conversion in excess of
the permitted amount hereunder shall remain outstanding under this Note. The
provisions of this Section may be waived by a Holder (but only as to itself and
not to any other Holder) upon not less than 65 days prior notice to the Company.
Other Holders shall be unaffected by any such waiver.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    Principal Market
Regulation.  The Company shall not be obligated to issue any
shares of Common Stock upon conversion of the Notes or exercise of the Warrants
if the issuance of such shares of Common Stock would cause the Company to breach
its obligations under the rules or regulations of the American Stock Exchange
(the “Exchange
Cap”), except that such limitation shall not apply in the event that the
Company (A) obtains the approval of its stockholders as required by the
applicable rules of the American Stock Exchange for issuances of Common Stock in
excess of such amount or (B) obtains a written opinion from outside counsel to
the Company that such approval is not required, which opinion shall be
reasonably satisfactory to the Buyer.  Until such approval or written
opinion is obtained, the Company shall not issue to the Holder in the aggregate,
Commitment Shares or, upon conversion or exercise or otherwise, as applicable,
of Notes or Warrants, Common Stock in an amount greater than the Exchange
Cap

     

    Other
Provisions.

     

    All
calculations under this Section 4 shall be rounded to the nearest $0.0001 or
whole share.

     

    The
Company covenants that it will at all times reserve and keep available out of
its authorized and unissued shares of Common Stock, free from preemptive rights
or any other actual contingent purchase rights of persons other than the Holder,
not less than such number of shares of the Common Stock as shall (subject to any
additional requirements of the Company as to reservation of such shares set
forth in this Note or in the Transaction Documents) be issuable (taking into
account the adjustments and restrictions set forth herein) upon the conversion
of the Conversion Amount.

     

    Nothing
herein shall limit a Holder’s right to pursue actual damages for the Company’s
failure to deliver certificates representing shares of Common Stock upon
conversion within the period specified herein and such Holder shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief,
in each case without the need to post a bond or provide other security. The
exercise of any such rights shall not prohibit the Holder from seeking to
enforce damages pursuant to any other Section hereof or under applicable
law.

     

    Adjustments to Conversion
Price

     

    Adjustment of Conversion
Price upon Issuance of Common Stock.  If the Company, at any
time while this Note is outstanding, issues or sells, or in accordance with this
Section 5(a) is deemed to have issued or sold, any shares of Common Stock,
excluding shares of Common Stock deemed to have been issued or sold by the
Company in connection with any Excluded Securities, for a consideration per
share (the “New
Issuance Price”) less than a price equal to the Conversion Price in
effect immediately prior to such issue or sale (such price the “Applicable Price”)
(the foregoing a “Dilutive Issuance”),
then immediately after such Dilutive Issuance the Conversion Price then in
effect shall be reduced to an amount equal to the New Issuance
Price.  For purposes of determining the adjusted Conversion Price
under this Section 5(a), the following shall be applicable:

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    Issuance of
Options.  If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion or exchange or
exercise of any Convertible Securities issuable upon exercise of such Option is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the granting or sale of such Option for such price per share.  For
purposes of this Section, the “lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or upon conversion
or exchange or exercise of any Convertible Securities issuable upon exercise of
such Option” shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon granting or sale of the Option, upon exercise of the Option
and upon conversion or exchange or exercise of any Convertible Security issuable
upon exercise of such Option.  No further adjustment of the Conversion
Price shall be made upon the actual issuance of such share of Common Stock or of
such Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange or exercise of such
Convertible Securities.

     

    Issuance of Convertible
Securities.  If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon such conversion or exchange or exercise thereof is
less than the Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company at the time of
the issuance or sale of such Convertible Securities for such price per
share.  For the purposes of this Section, the “lowest price per share
for which one share of Common Stock is issuable upon such conversion or exchange
or exercise” shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of
Common Stock upon the issuance or sale of the Convertible Security and upon the
conversion or exchange or exercise of such Convertible Security.  No
further adjustment of the Conversion Price shall be made upon the actual
issuance of such share of Common Stock upon conversion or exchange or exercise
of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which adjustment
of the Conversion Price had been or are to be made pursuant to other provisions
of this Section, no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.

     

    Change in Option Price or
Rate of Conversion.  If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion, exchange or exercise of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exchangeable or
exercisable for Common Stock changes at any time, the Conversion Price in effect
at the time of such change shall be adjusted to the Conversion Price which would
have been in effect at such time had such Options or Convertible Securities
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.  For purposes of this Section, if the terms of any Option or
Convertible Security that was outstanding as of the Issuance Date are changed in
the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of the
date of such change.  No adjustment shall be made if such adjustment
would result in an increase of the Conversion Price then in effect.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    Calculation of Consideration
Received.  In case any Option is issued in connection with the
issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for the difference of (x) the aggregate fair market value of such Options and
other securities issued or sold in such integrated transaction, less (y) the
fair market value of the securities other than such Option, issued or sold in
such transaction and the other securities issued or sold in such integrated
transaction will be deemed to have been issued or sold for the balance of the
consideration received by the Company.  If any Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor will be deemed to be the
gross amount raised by the Company; provided, however, that such gross amount is
not greater than 110% of the net amount received by the Company
therefor.  If any Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company will be the fair value of
such consideration, except where such consideration consists of securities, in
which case the amount of consideration received by the Company will be the
Closing Bid Price of such securities on the date of receipt.  If any
Common Stock, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be.  The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the
Holder.  If such parties are unable to reach agreement within ten (10)
days after the occurrence of an event requiring valuation (the “Valuation Event”),
the fair value of such consideration will be determined within five (5) Business
Days after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Holder.  The determination of such
appraiser shall be deemed binding upon all parties absent manifest error and the
fees and expenses of such appraiser shall be borne by the Company.

     

    Record
Date.  If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in Common Stock, Options or in Convertible Securities or
(B) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue or
sale of the Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    Adjustment of Conversion
Price upon Subdivision or Combination of Common Stock.  If the
Company, at any time while this Note is outstanding, shall (a) pay a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a
larger number of shares, (c) combine (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (d) issue
by reclassification of shares of the Common Stock any shares of capital stock of
the Company, then the Conversion Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.

     

    Purchase
Rights.  If at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete conversion of this Note (without taking into account any
limitations or restrictions on the convertibility of this Note) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.

     

    Other
Events.  If any event occurs of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company’s
Board of Directors will make an appropriate adjustment in the Conversion Price
so as to protect the rights of the Holder under this Note; provided that no such
adjustment will increase the Conversion Price as otherwise determined pursuant
to this Section 5.

     

    Other Corporate
Events.  In addition to and not in substitution for any other
rights hereunder, prior to the consummation of any Fundamental Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a “Corporate
Event”), the Company shall make appropriate provision to insure that the
Holder will thereafter have the right to receive upon a conversion of this Note,
at the Holder’s option, (i) in addition to the shares of Common Stock receivable
upon such conversion, such securities or other assets to which the Holder would
have been entitled with respect to such shares of Common Stock had such shares
of Common Stock been held by the Holder upon the consummation of such Corporate
Event (without taking into account any limitations or restrictions on the
convertibility of this Note) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other assets
received by the holders of shares of Common Stock in connection with the
consummation of such Corporate Event in such amounts as the Holder would have
been entitled to receive had this Note initially been issued with conversion
rights for the form of such consideration (as opposed to shares of Common Stock)
at a conversion rate for such consideration commensurate with the Conversion
Rate.  Provision made pursuant to the preceding sentence shall be in a
form and substance satisfactory to the Required Holders.  The
provisions of this Section shall apply similarly and equally to successive
Corporate Events and shall be applied without regard to any limitations on the
conversion or redemption of this Note.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    Whenever
the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall
promptly mail to the Holder a notice setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.

     

    In case
of any (1) merger or consolidation of the Company or any subsidiary of the
Company with or into another Person, or (2) sale by the Company or any
subsidiary of the Company of more than one-half of the assets of the Company in
one or a series of related transactions, a Holder shall have the right to (A)
exercise any rights under Section 2(b), (B) convert the aggregate amount of this
Note then outstanding into the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger, consolidation or sale, and such Holder shall be entitled
upon such event or series of related events to receive such amount of
securities, cash and property as the shares of Common Stock into which such
aggregate principal amount of this Note could have been converted immediately
prior to such merger, consolidation or sales would have been entitled, or (C) in
the case of a merger or consolidation, require the surviving entity to issue to
the Holder a Note with a principal amount equal to the aggregate principal
amount of this Note then held by such Holder, plus all accrued and unpaid
interest and other amounts owing thereon, which such newly issued Note shall
have terms identical (including with respect to conversion) to the terms of this
Note, and shall be entitled to all of the rights and privileges of the Holder of
this Note set forth herein and the agreements pursuant to which this Notes were
issued. In the case of clause (C), the conversion price applicable for the newly
issued shares of convertible preferred stock or Notes shall be based upon the
amount of securities, cash and property that each share of Common Stock would
receive in such transaction and the Conversion Price in effect immediately prior
to the effectiveness or closing date for such transaction. The terms of any such
merger, sale or consolidation shall include such terms so as to continue to give
the Holder the right to receive the securities, cash and property set forth in
this Section upon any conversion or redemption following such event. This
provision shall similarly apply to successive such events.

     

    REISSUANCE OF THIS
NOTE.

     

    Transfer.  If
this Note is to be transferred, the Holder shall surrender this Note to the
Company, whereupon the Company will, subject to the satisfaction of the transfer
provisions of the Securities Purchase Agreement, forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section 6(d)),
registered in the name of the registered transferee or assignee, representing
the outstanding Principal being transferred by the Holder and, if less than the
entire outstanding Principal is being transferred, a new Note (in accordance
with Section 6(d)) to the Holder representing the outstanding Principal not
being transferred.  The Holder and any assignee, by acceptance of this
Note, acknowledge and agree that, by reason of the provisions of Section
4(b)(iii) following conversion or redemption of any portion of this Note, the
outstanding Principal represented by this Note may be less than the Principal
stated on the face of this Note.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    Lost, Stolen or Mutilated
Note.  Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Note, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in accordance with
Section 6(d)) representing the outstanding Principal.

     

    Note Exchangeable for
Different Denominations.  This Note is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Note or Notes (in accordance with Section 6(d)) representing in the aggregate
the outstanding Principal of this Note, and each such new Note will represent
such portion of such outstanding Principal as is designated by the Holder at the
time of such surrender.

     

    Issuance of New
Notes.  Whenever the Company is required to issue a new Note
pursuant to the terms of this Note, such new Note (i) shall be of like tenor
with this Note, (ii) shall represent, as indicated on the face of such new Note,
the Principal remaining outstanding (or in the case of a new Note being issued
pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder
which, when added to the principal represented by the other new Notes issued in
connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note,
which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid
Interest from the Issuance Date.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    NOTICES.              Any
notices, consents, waivers or other communications required or permitted to be
given under the terms hereof 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) Trading 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, to:

            	
              Hyperdynamics
      Corporation

            
	 
      	
              One
      Sugar Creek Center Boulevard, Suite 125

            
	 
      	
              Sugar
      Land, Texas 77478

            
	 
      	
              Attention:                      Kent
      P. Watts

            
	 
      	
              Telephone:                    (713)
      353-9400

            
	 
      	
              Facsimile:                      (713)
      353-9421

            
	 
      	 
      
	
              With
      a copy to:

            	
              Joel
      Seidner, Esq.

            
	 
      	
              880
      Tully Road #50

            
	 
      	
              Houston,
      TX 77059

            
	 
      	
              Telephone:                    (281)
      493-1311

            
	 
      	
              Facsimile:                    
        (281) 667-3292

            
	 
      	 
      

    

    
      	
              If
      to the Holder:

            	
              YA
      Global Investments, LP

            
	 
      	
              101
      Hudson Street, Suite 3700

            
	 
      	
              Jersey
      City, NJ  07303

            
	 
      	
              Attention:                      Mark
      Angelo

            
	 
      	
              Telephone:                    (201)
      985-8300

            
	 
      	 
      
	
              With
      a copy to:

            	
              David
      Gonzalez, Esq.

            
	 
      	
              101
      Hudson Street – Suite 3700

            
	 
      	
              Jersey
      City, NJ 07302

            
	 
      	
              Telephone:                    (201)
      985-8300

            
	 
      	
              Facsimile:                      
      (201) 985-8266

            

    

     

     

    or at
such other address and/or facsimile number and/or to the attention of such other
person as the recipient party has specified by written notice given to each
other party three (3) Business Days prior to the effectiveness of such
change.  Written confirmation of receipt (i) given by the recipient of
such notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (iii) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

     

    Except as
expressly provided herein, no provision of this Note shall alter or impair the
obligations of the Company, which are absolute and unconditional, to pay the
principal of, interest and other charges (if any) on, this Note at the time,
place, and rate, and in the coin or currency, herein prescribed.  This
Note is a direct obligation of the Company. As long as this Note is outstanding,
the Company shall not and shall cause their subsidiaries not to, without the
consent of the Holder, (i) amend its certificate of incorporation, bylaws or
other charter documents so as to adversely affect any rights of the Holder; (ii)
repay, repurchase or offer to repay, repurchase or otherwise acquire shares of
its Common Stock or other equity securities other than as to the Underlying
Shares to the extent permitted or required under the Transaction Documents; or
(iii) enter into any agreement with respect to any of the
foregoing.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    This Note
shall not entitle the Holder to any of the rights of a stockholder of the
Company, including without limitation, the right to vote, to receive dividends
and other distributions, or to receive any notice of, or to attend, meetings of
stockholders or any other proceedings of the Company, unless and to the extent
converted into shares of Common Stock in accordance with the terms
hereof.

     

    No
indebtedness of the Company is senior to this Note in right of payment, whether
with respect to interest, damages or upon liquidation or dissolution or
otherwise.  Without the Holder’s consent, the Company will not and
will not permit any of their subsidiaries to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any indebtedness of any kind, on
or with respect to any of its property or assets now owned or hereafter acquired
or any interest therein or any income or profits there from that is senior in
any respect to the obligations of the Company under this Note.

     

    This Note
shall be governed by and construed in accordance with the laws of the State of
New Jersey, without giving effect to conflicts of laws thereof.  Each
of the parties consents to the jurisdiction of the Superior Courts of the State
of New Jersey sitting in Hudson County, New Jersey and the U.S. District
Court for the District of New Jersey sitting in Newark, New Jersey in connection
with any dispute arising under this Note and hereby waives, to the maximum
extent permitted by law, any objection, including any objection based on forum
non conveniens to the bringing of any such proceeding in such
jurisdictions.

     

    If the
Company fails to comply with the terms of this Note, then the Company shall
reimburse the Holder promptly for all fees, costs and expenses, including,
without limitation, attorneys’ fees and expenses incurred by the Holder in any
action in connection with this Note, including, without limitation, those
incurred: (i) during any workout, attempted workout, and/or in connection with
the rendering of legal advice as to the Holder’s rights, remedies and
obligations, (ii) collecting any sums which become due to the Holder, (iii)
defending or prosecuting any proceeding or any counterclaim to any proceeding or
appeal; or (iv) the protection, preservation or enforcement of any rights or
remedies of the Holder.

     

    Any
waiver by the Holder of a breach of any provision of this Note shall not operate
as or be construed to be a waiver of any other breach of such provision or of
any breach of any other provision of this Note. The failure of the Holder to
insist upon strict adherence to any term of this Note on one or more occasions
shall not be considered a waiver or deprive that party of the right thereafter
to insist upon strict adherence to that term or any other term of this Note. Any
waiver must be in writing.

     

    If any
provision of this Note is invalid, illegal or unenforceable, the balance of this
Note shall remain in effect, and if any provision is inapplicable to any person
or circumstance, it shall nevertheless remain applicable to all other persons
and circumstances. If it shall be found that any interest or other amount deemed
interest due hereunder shall violate applicable laws governing usury, the
applicable rate of interest due hereunder shall automatically be lowered to
equal the maximum permitted rate of interest. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of or interest on
this Note as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this
indenture, and the Company (to the extent it may lawfully do so) hereby
expressly waives all benefits or advantage of any such law, and covenants that
it will not, by resort to any such law, hinder, delay or impeded the execution
of any power herein granted to the Holder, but will suffer and permit the
execution of every such as though no such law has been enacted.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    Whenever
any payment or other obligation hereunder shall be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business
Day.

     

    THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF
THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION
DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ACTIONS OF ANY PARTY.  THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.

     

    CERTAIN
DEFINITIONS            For
purposes of this Note, the following terms shall have the following
meanings:

     

    “Approved Stock Plan”
means a stock option plan that has been approved by the Board of Directors of
the Company prior to the date of the Securities Purchase Agreement, pursuant to
which the Company’s securities may be issued only to any employee, officer,
director, attorney, consultant or vendor for services and/or goods provided to
the Company.

     

    “Bloomberg” means
Bloomberg Financial Markets.

     

    “Business Day” means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday in the United States or a day on which banking institutions are
authorized or required by law or other government action to close.

     

    “Change of Control
Transaction” means the occurrence of (a) an acquisition after the date
hereof by an individual or legal entity or “group” (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of fifty percent (50%) of the voting
securities of the Company (except that the acquisition of voting securities by
the Holder or any other current holder of convertible securities of the Company
shall not constitute a Change of Control Transaction for purposes hereof), (b) a
replacement at one time or over time of more than one-half of the members of the
board of directors of the Company which is not approved by a majority of those
individuals who are members of the board of directors on the date hereof (or by
those individuals who are serving as members of the board of directors on any
date whose nomination to the board of directors was approved by a majority of
the members of the board of directors who are members on the date hereof), (c)
the merger, consolidation or sale of fifty percent (50%) or more of the assets
of the Company or any subsidiary of the Company in one or a series of related
transactions with or into another entity, or (d) the execution by the Company of
an agreement to which the Company is a party or by which it is bound, providing
for any of the events set forth above in (a), (b) or (c).

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    “Closing Bid Price”
means the price per share in the last reported trade of the Common Stock on a
Primary Market or on the exchange  which the Common Stock is then
listed as quoted by Bloomberg.

     

    “Convertible
Securities” means any stock or securities (other than Options) directly
or indirectly convertible into or exercisable or exchangeable for Common
Stock.

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Common Stock” means
the common stock, par value $.001 per share, of the Company and stock of any
other class into which such shares may hereafter be changed or
reclassified.

     

     “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    “Excluded Securities”
means, (a) shares issued or deemed to have been issued by the Company pursuant
to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be
issued by the Company upon the conversion, exchange or exercise of any right,
option, obligation or security outstanding on the date prior to date of the
Securities Purchase Agreement, provided that the terms of such right, option,
obligation or security are not amended or otherwise modified on or after the
date of the Securities Purchase Agreement, and provided that the conversion
price, exchange price, exercise price or other purchase price is not reduced,
adjusted or otherwise modified and the number of shares of Common Stock issued
or issuable is not increased (whether by operation of, or in accordance with,
the relevant governing documents or otherwise) on or after the date of the
Securities Purchase Agreement, (c) shares issued in connection with any
acquisition by the Company, whether through an acquisition of stock or a merger
of any business, assets or technologies, leasing arrangement or any other
transaction the primary purpose of which is not to raise equity capital, and
(d) the shares of Common Stock issued or deemed to be issued by the Company
upon conversion of this Note or the exercise of the Warrants.

     

    “Installment Date” May
6, 2008, and continuing on the first Business Day of each successive calendar
month thereafter.

     

     “Options” means any
rights, warrants or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.

     

     “Person” means a
corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.

     

     “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    “Securities Purchase
Agreement” means the Securities Purchase Agreement dated February 6, 2008
by and among the Company and the Buyers listed on Schedule I attached
thereto.

    “Trading Day” means a
day on which the shares of Common Stock are quoted on the OTCBB or quoted or
traded on such Primary Market on which the shares of Common Stock are then
quoted or listed; provided, that in the event that the shares of Common Stock
are not listed or quoted, then Trading Day shall mean a Business
Day.

     

    “Transaction
Documents” means the Securities Purchase Agreement or any other agreement
delivered in connection with the Securities Purchase Agreement, including,
without limitation, the Security Agreement.

     

     “Warrants” has the
meaning ascribed to such term in the Securities Purchase Agreement, and shall
include all warrants issued in exchange therefor or replacement
thereof.

     

     

    [Signature
Page Follows]

     

    
      
        
           

        

        
          18

          
            

          

        

        
           

        

      

    

    

    IN WITNESS WHEREOF, the
Company has caused this Secured Note to be duly executed by a duly authorized
officer as of the date set forth above.

     

    

    
      	 
      	
              COMPANY:

            	 
	 
      	
              HYPERDYNAMICS
      CORPORATION

            	 
	 
      	 
      	 
      	 
	 
      	
              By:

            	
               

            	 
	 
      	
              Name:

            	
               

            	 
	 
      	
              Title

            	
               

            	 

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    EXHIBIT
I

    CONVERSION
NOTICE

     

    (To
be executed by the Holder in order to Convert the Note)

     

    
      TO:

       

       

    

    The
undersigned hereby irrevocably elects to convert $_______________________ of the
principal amount of Note No. HDY-2-1 into Shares of Common Stock of HYPERDYNAMICS CORPORATION,
according to the conditions stated therein, as of the Conversion Date written
below.

     

    
      	
              Conversion
      Date:

            	 
      
	 	 
	
              Conversion
      Amount to be converted:

            	
              $

            
	 	 
	
              Conversion
      Price:

            	
              $

            
	 	 
	
              Number
      of shares of Common Stock to be issued:

            	 
      
	 	 
	
              Amount
      of Note Unconverted:

            	
              $

            
	 	 
	 
      	 
      
	 
      	 
      
	
              Please
      issue the shares of Common Stock in the following name and to the
      following address:

            
	 
	
              Issue
      to:

               

               

               

               

            	 
      
	 
      	 
      
	
              Authorized
      Signature:

            	 
      
	 	 
	
              Name:

            	 
      
	 	 
	
              Title:

            	 
      
	 	 
	
              Broker
      DTC Participant Code:

            	 
      
	 	 
	
              Account
      Number:

            	 
      

    

     

     

    20

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