Contract
4.1
Warrant Agreement and its exhibits and attachments.
WARRANT
AGREEMENT dated as of June 12, 2007, between HYPERDYNAMICS CORPORATION
(Company), a Delaware corporation (the “Company” herein also referred to as
“Grantor”), and Trendsetter Investors, LLC (Grantee); both the Grantor and
Grantee herein also referred to collectively as “the parties”.
W
I T N E S S E T
H
:
WHEREAS,
the Company has agreed to issue warrants (“Warrants”) to purchase up to
3,480,000 shares (the “Shares”) of common stock of the Company, $.001 par value
per share (the “Common Stock”) for a exercise price of $4.00 per share (subject
to exercise price reset provisions specified in 5.2 hereunder) for consideration
of receiving a certain 30% working interest back from Grantee, also as part
of a
settlement of a lawsuit filed against Grantor by Grantee; and
WHEREAS,
the Warrants issued pursuant to this Agreement are being issued by the Company
to Grantee and/or its designees, in considerations specified above and also
in
more detail in a settlement agreement signed and executed by Grantor and Grantee
simultaneously with the issuance of this warrant; and
NOW,
THEREFORE, in consideration of the premises, the agreements herein set forth
and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto agree as follows:
1.
Grant
and Vesting.
Grantee
and/or its designees are hereby granted the right to purchase, at any time
from
the date of this Agreement until 5:00 P.M., Houston, Texas time, on the 7th
year
anniversary date of the date of this warrant, up to 3,480,000 restricted Section
144 common stock shares (1 share per warrant) at an Exercise Price of $4.00,
subject to exercise price reset provisions specified under 5.2
hereunder.
2. Warrant
Certificate.
The
warrant certificate (the “Warrant Certificate”) delivered and to be delivered
pursuant to this Agreement shall be in the form set forth as Exhibit A, attached
hereto and made a part hereof, with such appropriate insertions, omissions,
substitutions and other variations as required or permitted by this
Agreement.
3. Exercise
of Warrants.
Cash
Exercise
The
Exercise Price may be paid in cash or by check to the order of the Company,
or
any combination of cash or check. Upon surrender of the Warrant Certificate
with
an exercise letter duly executed, together with payment of the Exercise Price
for the Shares purchased, at the Company's executive offices (currently - One
Sugar Creek Center Boulevard / Suite 125 / Sugar Land, Texas 77478), the
registered holder of a Warrant Certificate (“Holder” or “Holders”) shall be
entitled to receive a certificate or certificates for the Shares so
purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Holder hereof, in whole or
in
part (but not as to fractional shares of the Common Stock). In the
case of the purchase of less than all the Shares purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares to be purchased thereunder. The
president of the Company may administer this process and, at his option, hold
the warrant certificates at the corporate office acting as the record keeper
for
transfer and exercise of Grantee warrants. In this case, the Grantee will simply
pay the exercise price and provide a letter of instruction whenever he/she
wishes to exercise the warrants and the President shall cause the stock to
be
issued and receive appropriate board resolution for the issuance of the
shares.
Provision
for certain Holder’s right for Cashless Exercise
This
warrant agreement is being entered into between the parties in part for
settlement of a lawsuit between them as specified in a simultaneous settlement
agreement and also for the company to purchase back a 30% working interest
in a
lease owned by Trendsetter Production Company. To facilitate the
settlement, Xxxx Xxxxx, the Company’s Chairman and CEO, or his affiliate, or
designee, has signed an agreement with Grantor to purchase the Grantor warrant
(to purchase 3,480,000 shares) issued from this warrant agreement for 1,740,000
shares of restricted common stock of Hyperdynamics Corporation. Upon the
transfer of the Grantor Warrant from Grantor as the warrant holder to Xxxx
Xxxxx
or his affiliate, or designee; then,
Xxxx
Xxxxx, his affiliate, or designee, or any of his or their future assigns, as
the
case may be, as a qualified warrant holder, shall have the right to exercise
the
warrant issued hereunder on a cashless basis.
EXAMPLE
OF A “CASHLESS BASIS” EXERCISE
As
an
example of how a cashless basis exercise would work, assuming the market price
of the stock is $20 per share and the exercise price is $4 per share, then
upon
a written exercise letter from the qualified holder, $13,920,000 ($4 x
3,480,000) would be due for the exercise price. This exercise price
would be paid by reducing the amount of stock issued by 870,000 shares
($13,920,000 / $16) so that the company would issue 2,610,000 shares to
qualified holder upon such notice of cashless exercise with zero cash payment
to
the company.
4. Issuance
of Common Stock Certificates.
Upon
the
exercise of the Warrants in accordance with the terms hereof, the issuance
of
certificates for the Shares shall be made forthwith (and in any event within
five (5) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall be issued in the name of, or
in
such names as may be directed by, the Holder thereof; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder.
The
Warrant Certificate and the certificates representing the Shares shall be
executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman or Vice Chairman of the Board of Directors,
Chief
Executive Officer, President or Executive Vice President of the Company. Warrant
Certificate shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
The
Warrant Certificate and, upon exercise of the Warrant, in part or in whole,
certificates representing the Shares shall bear a legend substantially similar
to the following:
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“The
securities represented by this certificate have not been registered
under
the Securities Act of 1933, as amended (the “Act”), and may not be offered
or sold except (i) pursuant to an effective registration statement
under
the Act, or (ii) upon the delivery by the holder to the Company of
an
opinion of counsel, reasonably satisfactory to counsel to the issuer,
stating that an exemption from registration under such Act is
available.”
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5. Price.
5.1. Exercise
Price. The term “Exercise Price” herein shall mean the exercise
price of the warrants that is to be $4.00 per share. This shall also be referred
to herein as the “initial exercise price”.
5.2. Resets
of
Exercise Price to “Adjusted Exercise Price”
(a)
Upon
the
Company receiving pre-approval from Cornell Capital Partners to waive their
existing rights for warrant re-pricing or at such time as their financing
covenants regarding all their outstanding warrants are no longer in effect,
whichever occurs first, the exercise price of the warrant issued hereunder
will
be reduced from $4.00 per share and reset to $2.40 per share.
(b)
At
any
time after the issuance of the 3,480,000 warrants specified herein, that the
Company causes any of its outstanding warrants or stock options to be re-priced
and reset at a exercise price lower than the initial exercise price specified
in
5.1 above or adjusted exercise price that may result from 5.2.(a) above, then
the exercise price herein will be reduced and reset to that same
price. In any case, once the exercise price is reset, the exercise
price can and will be further adjusted down upon any other reduction and reset
of other outstanding stock options or warrants to a exercise price lower than
any reset exercise price previously determined for these 3,480,000 warrants.
In
no case once the exercise price is reduced and reset to a lower price, will
the
exercise price be increased again in the future.
6. Registration Rights.
6.1. Not
Registered Under the Securities Act of 1933. The Warrants and the
Shares have not been registered as of the date of issuance of the Warrants
under
the Securities Act of 1933, as amended (“the Act”).
6.2. Registration
Rights. Holders of warrant securities hereunder shall have
piggy-back registration rights for the common stock that the warrants are
converted into, pursuant to this agreement. Should the company file a
registration statement in the future, for registration of securities, the
company will be obligated to register the 3,480,000 shares of common stock
that
the warrant herein is convertible into so that upon any exercise by the
qualified holder, registered common stock shall be issued.
7. Exchange
and Replacement of Warrant Certificates.
Each
Warrant Certificate is exchangeable without expense, upon the surrender hereof
by the registered Holder at the principal executive office of the Company,
for a
new Warrant Certificate of like tenor and date representing in the aggregate
the
right to purchase the same number of Shares in such denominations as shall
be
designated by the Holder thereof at the time of such surrender.
Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any Warrant Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory
to
it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Warrants, if mutilated,
the
Company will make and deliver a new Warrant Certificate of like tenor, in lieu
thereof.
8. Elimination
of Fractional Interests.
The
Company shall not be required to issue certificates representing fractions
of
shares of Common Stock and shall not be required to issue scrip or pay cash
in
lieu of fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Common Stock.
9. Reservation
of Securities.
The
Company shall at all times reserve and keep available out of its authorized
shares of Common Stock, solely for the purpose of issuance upon the exercise
of
the Warrants, such number of shares of Common Stock as shall be issuable upon
the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
shareholder.
10. Selling
Limitations for Grantee
It
is
anticipated that all restricted stock ultimately converted by Grantee through
the exercise of the Warrants will become eligible to be sold under rule 144
after 1 year or 144k after 2 years, except for affiliate rules and other
limitations that may apply.
11. Notices
to Warrant Holders.
Nothing
contained in this Agreement shall be construed as conferring upon the Holder
or
Holders the right to vote or to consent or to receive notice as a shareholder
in
respect of any meetings of shareholders for the election of directors or any
other matter, or as having any rights whatsoever as a shareholder of the
Company.
12.
Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed to have been duly made when delivered, or two days
after it is mailed by registered or certified mail, return receipt
requested:
(a) If
to a
registered Holder of the Warrants, to the address of such Holder as shown on
the
books of the Company; or
(b) If
to the
Company, to the address set forth in Section 3 of this Agreement or to such
other address as the Company may designate by notice to the
Holders.
13. Supplements
and Amendments.
The
Company and Grantee may from time to time supplement or amend this Agreement
without the approval of any Holders of Warrant Certificates in order to cure
any
ambiguity, to correct or supplement any provision contained herein which may
be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and Grantee may deem necessary or desirable and which the Company and Grantee
deem not to adversely affect the interests of the Holders of Warrant
Certificates.
14. Successors.
All
the
covenants and provisions of this Agreement by or for the benefit of the Company
and the Holders inure to the benefit of their respective successors and assigns
hereunder.
15. Termination.
This
Agreement shall terminate at the close of business on May 17,
2014. Notwithstanding the foregoing, this Agreement will terminate on
any earlier date when all Warrants have been exercised; The warrants hereunder
expire 7 years from issuance date. If any warrants have not been exercised
7
years from their issuance date, they automatically expire.
16. Governing
Law.
This
Agreement and each Warrant Certificate issued hereunder shall be deemed to
be a
contract made under the laws of the State of Texas and for all purposes shall
be
construed in accordance with the laws of said State.
17. Benefits
of This Agreement.
Nothing
in this Agreement shall be construed to give to any person or corporation other
than the Company and Grantee and any other registered holder or holders of
the
Warrant Certificates, Warrants or the Shares any legal or equitable right,
remedy or claim under this Agreement; and this Agreement shall be for the sole
and exclusive benefit of the Company and any other holder or holders of the
Warrant Certificates, Warrants or the Shares.
18. Limited
Transferability.
Pursuant
to the simultaneous settlement agreement, the Warrant shall be transferable
or
assignable by Grantee, in whole, only (i) to Xxxx Xxxxx (ii) to his Affiliates
(iii) or his otherwise designees, as the case may be. The
Company will treat the registered holder of the Warrant the Holder for all
purposes.
19.
Counterparts.
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same
instrument.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
HYPERDYNAMICS
CORPORATION
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By:
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Name:
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Title:
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GRANTEE:
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TRENDSETTER
INVESTORS, LLC
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By:
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Name:
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Title:
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Exhibit
A
THE
WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED (THE “ACT”), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER
TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR
THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE
TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
EXERCISABLE
ON OR BEFORE
5:00
P.M., HOUSTON, TEXAS TIME, MAY ____, 2014
No.
A-1
3,480,000 Warrants
WARRANT
CERTIFICATE
This
Warrant Certificate certifies that Trendsetter Investors, L.L.C. is the
registered holder of 3,480,000 Warrants to purchase, at any time from May _____,
2007, until 5:00 P.M. Houston, Texas time on May ______, 2014 (“Expiration
Date”), up to 3,480,000 shares (“Shares”) of fully-paid and non-assessable
common stock, $.001 par value (“Common Stock”), of Hyperdynamics Corporation, a
Delaware corporation (the “Company”), at the initial exercise price, subject to
adjustment in certain events (the “Exercise Price”), of $4.00 per Share upon
surrender of this Warrant Certificate and payment of the Exercise Price at
an
office or agency of the Company, but subject to the conditions set forth herein
and in the warrant agreement dated as of May 17, 2007 between the Company and
Trendsetter Investors, L.L.C. (the “Warrant Agreement”). Payment of
the Exercise Price may be made in cash, or by certified or official bank check
in New York Clearing House funds payable to the order of the Company, or any
combination of cash or check.
(OPTIONAL
LANGUAGE DEPENDING ON HOLDER) and also pursuant to article 3 of the Warrant
Agreement the warrants may be exercised under a cashless basis exercise as
specified therein.
No
Warrant may be exercised after 5:00 P.M., Houston, Texas time, on the Expiration
Date, at which time all Warrants evidenced hereby, unless exercised prior
thereto, shall thereafter be void.
The
Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants issued pursuant to the Warrant Agreement, which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and
the
holders (the words “holders” or “holder” meaning the registered holders or
registered holder) of the Warrants.
The
Warrant Agreement provides that upon the occurrence of certain events, the
Exercise Price and/or number of the Company's securities issuable thereupon
may,
subject to certain conditions, be adjusted. In such event, the
Company will, at the, request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type
of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not
in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Warrant Agreement.
Upon
due
presentment for registration of transfer of this Warrant Certificate at an
office or agency of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferees) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon
the
exercise of less than all of the Warrants evidenced by this Certificate, the
Company shall forthwith issue to the holder hereof a new Warrant Certificate
representing such number of unexercised Warrants.
The
Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes,
and
the Company shall not be affected by any notice to the contrary.
All
terms
used in this Warrant Certificate which are defined in the Warrant Agreement
shall have the meanings assigned to them in the Warrant Agreement.
IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.
Dated: ______________ | HYPERDYNAMICS CORPORATION | |||
By:
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Name:
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Title:
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Attest:
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Name:
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Title
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[FORM
OF
ELECTION TO EXERCISE]
The
undersigned hereby irrevocably elects to exercise the right, represented by
this
Warrant Certificate, to purchase ____________ Shares and herewith
tenders in payment for such Shares cash or a certified or official bank check
payable to the order of ______________________________. in the amount of
$_______________, all in accordance with the terms hereof. The
undersigned requests that a certificate for such Shares be registered in the
name of _____________________________________________________, whose
address is _______________________________________________________________,
and
that such Certificate be delivered to
____________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:
(Signature
must conform in all respects to name of holder as specified on the face of
the
Warrant Certificate.)
(Insert
Social Security or Other Identifying
Number of Holder)
[FORM
OF
ASSIGNMENT]
(To
be
executed by the registered holder if such holder
desires
to transfer the Warrant Certificate.)
FOR
VALUE
RECEIVED _____________________________________________ hereby sells, assigns
and
transfers unto
______________________________________________________
(Please
print name and address of transferee)
this
Warrant Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint
__________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _____________________________________________
Signature:_____________________________________________
(Signature
must conform in all respects to name of holder as specified on the face of
the
Warrant Certificate)
(Insert
Social Security or Other Identifying
Number of Holder)