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
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Warrant
No.: HDY-2-1
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Number
of Shares:
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550,000
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Warrant
Exercise Price:
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$2.00
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Expiration
Date:
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February
6, 2013
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Date
of Issuance: February 6, 2008
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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.
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).
(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.
(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 ”):
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Net
Number =
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(A x B) – (A x C)
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B
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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.
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 (5 th
) 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.
(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 (10 th
) 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.
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 l
