Document:

ex10_1.htm

    
      

    

    Exhibit
10.1

    

    ZONES,
INC.

    RESTRICTED
STOCK PURCHASE AGREEMENT

    

    

    Zones,
Inc. has granted to the Participant named in the Notice of Grant of Stock Purchase
Right (the “Notice”) to which this Restricted
Stock Purchase Agreement (the “Agreement”) is attached a Purchase
Right consisting of a right to purchase certain shares of Common Stock upon the
terms and conditions set forth in the Notice and this Agreement.  The
Purchase Right has been granted pursuant to and shall in all respects be subject
to the terms and conditions of the Zones, Inc. 2003 Equity Incentive Plan (the
“Plan”), as amended to the Date of
Grant, the provisions of which are incorporated herein by
reference.  By signing the Notice, the Participant: (a)
represents that the Participant has
received copies of, and has read and is familiar with the terms and conditions
of the Notice, the Plan and this Agreement, (b) accepts the Purchase Right
subject to all of the terms and conditions of the Notice, the Plan and this
Agreement, and (c) agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board upon any questions arising under the
Notice, the Plan or this Agreement.

    

    1.           Definitions
and Construction.

    

    1.1           Definitions.  Unless
otherwise defined herein, capitalized terms shall have the meanings assigned to
such terms in the Notice or the Plan.

    

    1.2           Construction.  Captions
and titles contained herein are for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement.  Except
when otherwise indicated by the context, the singular shall include the plural
and the plural shall include the singular.  Use of the term “or” is
not intended to be exclusive, unless the context clearly requires
otherwise.

    

    2.           Exercise
of Purchase Right.

    

    2.1           Exercise of Purchase
Right.  Provided that the Participant’s service to the Company
or its Subsidiaries has not terminated (except as provided by Section 4), the
Purchase Right shall be exercisable on and after the Date of Grant and prior to
the Expiration Date (as set forth in the Notice) in an amount not to exceed the
Total Number of Shares, subject to the Company’s repurchase rights set forth in
Sections 5 and 6.

    

    2.2           Method of Exercise of Purchase
Right.  Exercise
of the Purchase Right shall be by written notice to the Company, which must
state the election to exercise the Purchase Right, the number of whole shares of
Common Stock for which the Purchase Right is being exercised and such other
representations and agreements as to the Participant’s investment intent with
respect to such shares as may be required pursuant to the provisions of this
Agreement.  The written notice must be signed by the Participant and
must be delivered in person, by certified or registered mail, return receipt
requested, by confirmed facsimile transmission, or by such other means as the
Company may permit, to the Chief Financial Officer of the Company, or other
authorized representative of the Company, prior to the Expiration Date,
accompanied by (i) full payment of the aggregate Purchase Price for the
number of shares of Stock being purchased and (ii) an executed copy of the
then current form of escrow agreement or escrow instructions referenced
below.  The Purchase Right shall be deemed to be exercised upon
receipt by the Company of such written notice, the aggregate Purchase Price, and
such executed agreements or instructions.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    2.3           Payment of Purchase
Price.  Payment of the aggregate Purchase Price for the number
of shares of Common Stock for which the Purchase Right is being exercised shall
be made in cash, by check, cash equivalent, cancellation of debt, or in the form
of the Participant’s past service rendered to the Company or its Subsidiaries or
for its benefit having a value not less than the aggregate purchase price of the
shares being acquired, or such other payment as determined by the Plan
Administrator.

    

    2.4           Tax Withholding.

    

    (a)           In General.  At the
time the Purchase Right is exercised, in whole or in part, or at any time
thereafter as requested by the Company, the Participant hereby authorizes
withholding from payroll and any other amounts payable to the Participant, and
otherwise agrees to make adequate provision for any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the
Participating Company Group, if any, which arise in connection with the shares
acquired pursuant to this Agreement, including, without limitation, obligations
arising upon (i) the exercise, in whole or in part, of the Purchase Right,
(ii) the transfer, in whole or in part, of any shares acquired,
(iii) the filing of an election to recognize tax liability, or
(iv) the lapsing of any restriction with respect to any shares
acquired.  The Purchase Right is not exercisable unless the tax
withholding obligations of the Participating Company Group are
satisfied.  Accordingly, the Company shall have no obligation to
deliver shares of Stock or to release shares of Stock from an escrow established
pursuant to this Agreement until the tax withholding obligations of the
Participating Company Group have been satisfied by the Participant.

    

    (b)           Withholding in
Shares.  The Participant may, at his or her election, satisfy
all or any portion of the Company’s tax withholding obligations by directing the
Company to withhold a number of whole, Vested Shares otherwise deliverable to
the Participant or to accept from the Participant the tender of a number of
whole, Vested Shares or vested shares acquired otherwise than pursuant to the
Award having, in any such case, a fair market value, as determined by the
Company as of the date on which the tax withholding obligations arise, not in
excess of the amount of such tax withholding obligations determined by the
applicable minimum statutory withholding rates.

    

    2.5           Certificate Registration.  The
certificate for the shares of Stock purchased shall be registered in the name of
the Participant, or, if
applicable, in the names of the heirs of the Participant.

    

    2.6           Restrictions on Sale and Issuance of
Shares.  The
sale and issuance of shares of Stock shall be subject to compliance with all
applicable requirements of federal, state or foreign law with respect to such
securities.  The Purchase Right may not be exercised if the issuance
of shares of Stock upon exercise would constitute a violation of any applicable
federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may
then be listed.  In addition, the Purchase Right may not be exercised
unless (i) a registration statement under the Securities Act shall at the
time of exercise of the Purchase Right be in effect with respect to the shares
issuable upon exercise of the Purchase Right or (ii) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of the Securities Act.  The inability of
the Company to obtain from any regulatory body having jurisdiction the
authority, if any, deemed by the Company’s legal counsel to
be necessary to the lawful issuance and sale of any shares subject to the
Purchase Right shall relieve the Company of any liability in respect of the
failure to issue or sell such shares as to which such requisite authority shall
not have been obtained.  As a condition to the exercise of the
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    3.           Vesting
of Shares.

    

    Except as
otherwise provided in the Plan, shares acquired pursuant to this Agreement shall
become Vested Shares as provided in the Notice.

    

    4.           Nontransferability
of Purchase Right.

    

    The
Purchase Right may be exercised during the lifetime of the Participant only by
the Participant or the Participant’s guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution.  Following the
death of the Participant, the Purchase Right may be exercised prior to the
Expiration Date by the Participant’s legal
representative or by any person empowered to do so under the deceased
Participant’s
will or under the then applicable laws of descent and distribution.

    

    5.           Unvested
Share Repurchase Option.

    

    5.1           Grant of Unvested Share
Repurchase Option.  Under
the terms and subject to the conditions set forth in this Section 5, the Company
shall have the right to repurchase the Unvested Shares (the “Unvested Share
Repurchase Option”) in the events and in the
amounts set forth below:

    

    (a)           In
the event the Participant’s Service with the
Participating Company Group is terminated for any reason, the Company shall have
the right to repurchase all of the Unvested Shares.

    

    (b)           In
the event the Participant achieves less than 100% satisfaction of any annual
performance goal determined by the Board as set forth in the Notice, the Company
shall have the right to repurchase all of the Unvested Shares that shall have
failed to become Vested Shares as a result of the Participant’s failure to
achieve 100% satisfaction of such performance goal. The Board shall have sole
discretion to determine the performance goals and the numbers of shares that
shall become Vested Shares upon partial or 100% satisfaction of that particular
performance goal.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (c)           In
the event of a Change of Control (as defined in the Plan) with respect to the
Company, the Company shall have the right to repurchase all of the Unvested
Shares that failed to become Vested Shares immediately prior to such Change of
Control on an accelerated basis in connection with such Change of Control as
provided in the Notice.

    

    5.2           Unvested Shares Defined.  The
“Unvested
Shares” shall
mean, on any given date, the number of shares of Stock acquired upon exercise of
the Purchase Right that exceed the number of Vested Shares determined as of such
date.

    

    5.3           Exercise of Unvested Share Repurchase
Option.  The
Company may exercise the Unvested Share Repurchase Option with respect to shares
that are held in escrow pursuant to Section 6.1 by written notice to the
Participant at any time upon or after (a) termination of the
Participant’s
Service as described in Section 5.1(a), (b) the Board’s determination that
Participant failed to satisfy 100% of his or her performance goals for an
applicable year, or (c) a Change of Control of the Company (including
immediately prior to such Change of Control).  If the Company fails to
give notice prior to the time any particular shares are released to Participant
from the escrow, the Unvested Share Repurchase Option shall be conclusively
deemed to have terminated with respect to those shares.  The Unvested
Share Repurchase Option must be exercised, if at all, for all of the Unvested
Shares under the circumstances described in Section 5.1(a) or Section
(c).

    

    5.4           Payment for Shares and Return of
Shares to Company.  The
purchase price per share being repurchased by the Company shall be an amount
equal to the Participant’s original cost
per share, as adjusted pursuant to Section 8 (the “Repurchase
Price”).  The Company
shall pay the aggregate Repurchase Price to the Participant in cash within
thirty (30) days after the date of the written notice to the Participant of the
Company’s
exercise of the Unvested Share Repurchase Option.  For purposes of the
foregoing, cancellation of any purchase money indebtedness of the Participant to
any Participating Company for the shares shall be treated as payment to the
Participant in cash to the extent of the unpaid principal and any accrued
interest canceled.  The shares being repurchased shall be delivered to
the Company by the Participant at the same time as the delivery of the
Repurchase Price to the Participant.

    

    5.5           Assignment of Unvested Share
Repurchase Option.  The
Company shall have the right to assign the Unvested Share Repurchase Option at
any time, whether or not such option is then exercisable, to one or more persons
as may be selected by the Company.

    

    6.           Escrow.

    

    6.1           Establishment of Escrow.  To
ensure that shares subject to the Unvested Share Repurchase Option will be
available for repurchase, the Participant shall deposit the certificate
evidencing the shares that the Participant purchases upon exercise of the
Purchase Right with an agent designated by the Company under the terms and
conditions of the Joint Escrow Instructions included herewith. Upon the
occurrence of a change, as described in Section 7, in the character or amount of
any of the outstanding stock of the corporation the stock of which is subject to
the provisions of this Agreement, any and all new, substituted or additional
securities or other property to which the Participant is entitled by reason of
the Participant’s ownership of
shares of Stock acquired upon exercise of the Purchase Right that remain,
following such change described in Section 7, subject to the Unvested Share
Repurchase Option shall be immediately subject to the escrow to the same extent
as such shares of Stock immediately before such event.  The Company
shall bear the expenses of the escrow.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    6.2           Delivery of Shares to
Participant.  Subject
to the terms of the Joint Escrow Instructions, as soon as practicable after the
expiration of the Unvested Share Repurchase Option, but not more frequently than
twice each calendar year, the agent shall deliver to the Participant the shares
and any other property no longer subject to such restrictions.

    

    6.3           Notices and Payments.  In
the event the shares and any other property held in escrow are subject to the
Company’s
exercise of the Unvested Share Repurchase Option, the notices required to be
given to the Participant shall be given to the escrow agent, and any payment
required to be given to the Participant shall be given to the escrow
agent.  Within thirty (30) days after payment by the Company, the
escrow agent shall deliver the shares and any other property which the Company
has purchased to the Company and shall deliver the payment received from the
Company to the Participant.

    

    7.           Adjustments
for Changes in Capital Structure.

    

    Subject
to any required action by the stockholders of the Company, in the event of any
change in the Stock effected without receipt of consideration by the Company,
whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, split-up, split-off, spin-off, combination of shares, exchange of shares,
or similar change in the capital structure of the Company, or in the event of
payment of a dividend or distribution to the stockholders of the Company in a
form other than Stock (excepting normal cash dividends) that has a material
effect on the Fair Market Value of shares of Stock, appropriate and
proportionate adjustments shall be made in the number, purchase price and class
of shares of stock or other property subject to this Agreement, in order to
prevent dilution or enlargement of the Participant’s rights under the
Agreement.  For purposes of the foregoing, conversion of any
convertible securities of the Company shall not be treated as “effected without
receipt of consideration by the Company.”  Any and all new,
substituted or additional securities or other property to which Participant is
entitled by reason of his or her ownership of shares acquired pursuant to this
Agreement will be immediately subject to the provisions of this Agreement on the
same basis as all shares originally purchased hereunder.  For purposes
of Sections 5 and 6 hereof, while the total price payable to exercise the
rights provided in such sections will remain the same after each such event, the
price payable per share to exercise such rights will be appropriately
adjusted.

    

    8.           Tax
Matters.

    

    8.1           Election under Section 83(b) of the
Code.  The Participant understands that Section 83 of the Code
taxes as ordinary income the difference between the amount paid for the shares
and the fair market value of the shares as of the date any restrictions on the
shares lapse.  In this context, “restriction” means the right of the
Company to buy back the shares pursuant to the Unvested Share Repurchase Option
contained in this Agreement.  The Participant understands that he or
she may elect to be taxed at the time the shares are purchased rather than when
and as the Unvested Share Repurchase Option expires by filing an election under
Section 83(b) of the Code with the IRS no later than thirty (30) days after the
date of purchase.  Even if the fair market value of the shares equals
the amount paid for the shares, the election must be made to avoid adverse tax
consequences in the future.  The form for making this election is
included as an attachment to the Notice or may be requested from the
Company.  The Participant understands that failure to make this filing
timely will result in the recognition of ordinary income by the Participant as
the Unvested Share Repurchase Option lapses on the difference between the
purchase price and the fair market value of the shares at the time such
restrictions lapse.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    8.2           Notice to
Company.  The Participant will notify the Company in writing if
the Participant files an election pursuant to Section 83(b) of the
Code.  The Company intends, in the event it does not receive from the
Participant evidence of such filing, to claim a tax deduction for any amount
that would otherwise be taxable to the Participant in the absence of such an
election.

    

    8.3           Consultation with Tax
Advisors. The Participant understands that he or she should consult with
his or her tax advisor regarding the advisability of filing with the IRS an
election under Section 83(b) of the Code.  Failure to file an election
under Section 83(b), if appropriate, may result in adverse tax consequences to
the Participant.  The Participant acknowledges that he or she has been
advised to consult with a tax advisor regarding the tax consequences to the
Participant of the purchase of shares hereunder.  AN ELECTION UNDER
SECTION 83(b) MUST BE FILED NO LATER THAN 30 DAYS AFTER THE DATE ON WHICH
PARTICIPANT PURCHASES THE SHARES.  THIS TIME PERIOD CANNOT BE
EXTENDED.  PARTICIPANT ACKNOWLEDGES THAT TIMELY FILING OF A SECTION
83(b) ELECTION IS PARTICIPANT’S SOLE RESPONSIBILITY, EVEN IF PARTICIPANT
REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO FILE SUCH ELECTION ON HIS OR HER
BEHALF.

    

    9.           Legends.

    

    The
Company may at any time place legends referencing the Unvested Share Repurchase
Option and any applicable federal, state or foreign securities law restrictions
on all certificates representing shares of stock subject to the provisions of
this Agreement.  The Participant shall, at the request of the Company,
promptly present to the Company any and all certificates representing shares
acquired pursuant to this Agreement in the possession of the Participant in
order to carry out the provisions of this Section.  Unless otherwise
specified by the Company, legends placed on such certificates may include, but
shall not be limited to, the following:

    

    “THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND REPURCHASE OPTIONS IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET
FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH
HOLDER’S
PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF
THIS CORPORATION.”

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    10.           Restrictions
on Transfer of Shares.

    

    No shares
acquired upon exercise of the Purchase Right may be sold, exchanged, transferred
(including, without limitation, any transfer to a nominee or agent of the
Participant), assigned, pledged, hypothecated or otherwise disposed of,
including by operation of law, in any manner that violates any of the provisions
of this Agreement and, until the date on which such shares become Vested Shares,
and any such attempted disposition shall be void.  The Company shall
not be required (a) to transfer on its books any shares that will have been
transferred in violation of any of the provisions set forth in this Agreement or
(b) to treat as owner of such shares or to accord the right to vote as such
owner or to pay dividends to any transferee to whom such shares will have been
so transferred.

    

    11.           Rights as
a Shareholder.

    

    The
Participant shall have no rights as a shareholder with respect to any shares
covered by the Purchase Right until the date of the issuance of a certificate
for the shares for which the Purchase Right has been exercised (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company).  No adjustment shall be made for
dividends, distributions or other rights for which the record date is prior to
the date such certificate is issued, except as provided in Section
7.  Subject the provisions of this Agreement, the Participant shall
exercise all rights and privileges of a shareholder of the Company with respect
to shares of Stock of the Participant deposited in escrow pursuant to Section
7.

    

    12.           Rights as
an Employee or Consultant.

    

    If the
Participant is an Employee, the Participant understands and acknowledges that,
except as otherwise provided in a separate, written employment agreement between
a Participating Company and the Participant, the Participant’s employment is
“at will” and is for no specified term.  Nothing in this Agreement
shall confer upon the Participant any right to continue in the Service of a
Participating Company or interfere in any way with any right of the
Participating Company Group to terminate the Participant’s Service as an
Employee or Consultant, as the case may be, at any time.

    

    13.           Administration.

    

    All
questions of interpretation concerning the Notice and this Agreement shall be
determined by the Board.  All determinations by the Board shall be
final and binding upon all persons having an interest in this
Agreement.  Any Officer shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, or election which is
the responsibility of or which is allocated to the Company herein, provided the
Officer has apparent authority with respect to such matter, right, obligation,
or election.

    

    14.           Miscellaneous
Provisions.

    

    14.1           Further
Instruments.  The parties hereto agree to execute such further
instruments and to take such further action as may reasonably be necessary to
carry out the intent of this Agreement.

    
      
         

      

      
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    14.2           Binding
Effect.  This Agreement shall inure to the benefit of the
successors and assigns of the Company and, subject to the restrictions on
transfer set forth herein, be binding upon the Participant and the Participant’s
heirs, executors, administrators, successors and assigns.

    

    14.3           Termination or
Amendment.  The Board may terminate or amend the Plan or this
Agreement at any time; provided, however, that no such termination or amendment
may adversely affect the Participant’s rights under this Agreement without the
consent of the Participant, unless such termination or amendment is necessary to
comply with any applicable law or government regulation.  No amendment
or addition to this Agreement shall be effective unless in writing.

    

    14.4           Notices.  Any notice
required or permitted hereunder shall be given in writing and shall be deemed
effectively given (except to the extent that this Agreement provides for
effectiveness only upon actual receipt of such notice) upon personal delivery or
upon deposit in the United States Post Office, by registered or certified mail,
with postage and fees prepaid, addressed to the other party at the address shown
below that party’s signature in the
Notice or at such other address as such party may designate in writing from time
to time to the other party.

    

    14.5           Integrated
Agreement.  The Notice, this Agreement and the Plan constitute
the entire understanding and agreement of the Participant and the
Participating Company Group with respect to the subject matter contained herein
or therein and supersede any prior agreements, understandings, restrictions,
representations, or warranties among the Participant and the
Participating Company Group with respect to such subject matter other than those
as set forth or provided for herein or therein.

    

    14.6           Applicable Law.  The
Agreement shall be governed by the laws of the State of Washington as such laws
are applied to agreements between Washington residents entered into and to be
performed entirely within the State of Washington.

    

    14.7           Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

    

    
      	 
      	 
      	 
      	
              ZONES,
      INC.

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              By:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              Title:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
              PARTICIPANT

            
	 
      	 
      	 
      	 
      	 
      
	
              Date:

            	 
      	 
      	 
      
	 
      	 
      	 
      	
              Participant
      Address:

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      

    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    
      	 
      	
              Participant:

            	 
      

    

    

    
      	 
      	
              Date:

            	 
      

    

    

    

    NOTICE
OF EXERCISE OF STOCK PURCHASE RIGHT

    

    

    Zones,
Inc.

    1102 15th
Street SW

    Auburn,
Washington 98001

    

    Ladies
and Gentlemen:

    

    1.           Stock
Purchase Right.  I was granted a
right to purchase (the “Purchase
Right”) shares
of the common stock (the “Shares”) of Zones, Inc. (the “Company”) pursuant to the
Company’s
2003 Equity Incentive Plan (the “Plan”), my Notice of Grant of
Stock Purchase Right (the “Notice”) and my Stock Purchase
Agreement (the “Agreement”) as follows:

    

    
      	
              Grant
      Number:

            	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Date
      of Grant:

            	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Total
      Number of Shares:

            	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Purchase
      Price per Share:

            	 
      	
              $

            	 
      

    

    

    2.           Exercise
of Purchase Right.  I hereby elect to
exercise my Purchase Right for the following number of Shares:

    

    
      	
              Vested
      Shares:

            	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Unvested
      Shares:

            	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Total
      Shares Purchased:

            	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Total
      Purchase Price (Total
      Shares  X  Price per Share)

            	 
      	
              $

            	 
      

    

    

    3.           Payments.  I enclose payment
in full of the total purchase price for the Shares in the following form(s), as
authorized by my Agreement:

    

    
      	
               ̈  Cash:

            	 
      	
              $

            	 
      
	 
      	 
      	 
      	 
      
	
               ̈  Check:

            	 
      	
              $

            	 
      
	 
      	 
      	 
      	 
      
	
               ̈  Credit
      for Services Rendered:

            	 
      	
              $

            	 
      

    

    

    4.           Tax
Withholding.  I authorize
payroll withholding and otherwise will make adequate provision for the federal,
state, local and foreign tax withholding obligations of the Company, if any, in
connection with my purchase of the Shares.  I enclose payment in full
of my withholding taxes, if any, or instruct the Company to withhold shares
pursuant to Section 2.4(b) of the Agreement as follows:

    

    (Contact
Plan Administrator for amount of tax due.)

    

    
      	
               ̈  Cash:

            	 
      	
              $

            	 
      
	 
      	 
      	 
      	 
      
	
               ̈  Check:

            	 
      	
              $

            	 
      
	 
      	 
      	 
      	 
      
	
               ̈  Withhold
      shares

            	 
      	 
      	 
      

    

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    5.           Participant
Information.

    

    
      	
              My
      address is:

            	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

    

    

    
      	
              My
      Social Security Number is:

            	 
      	 
      

    

    

    

    6.           Binding
Effect.  I agree that the
Shares are being acquired in accordance with and subject to the terms,
provisions and conditions of the Agreement, including the Unvested Share
Repurchase Option set forth therein, to all of which I hereby expressly
assent.  This Agreement shall inure to the benefit of and be binding
upon my heirs, executors, administrators, successors and assigns.  If
required by the Company, I agree to deposit the certificate(s) evidencing the
Shares, along with a blank stock assignment separate from certificate executed
by me, with an escrow agent designated by the Company, to be held pursuant to
the Company’s
standard escrow agreement or escrow instructions.

    

    8.           Election
Under Section 83(b) of the Code.  I understand and
acknowledge that if I am exercising the Purchase Right to purchase Unvested
Shares (i.e., shares that remain subject to the Company’s Unvested Share
Repurchase Option), that I should consult with my tax advisor regarding the
advisability of filing with the Internal Revenue Service an election under
Section 83(b) of the Code, which must be filed no later than thirty (30)
days after the date on which I purchase the Shares.  I acknowledge
that I have been advised to consult with a tax advisor prior to the exercise of
the Purchase Right regarding the tax consequences to me of exercising the
Purchase Right.  AN ELECTION UNDER SECTION 83(b) MUST BE FILED
WITHIN 30 DAYS AFTER THE DATE ON WHICH I PURCHASE SHARES.  THIS TIME
PERIOD CANNOT BE EXTENDED.  I ACKNOWLEDGE THAT TIMELY FILING OF A
SECTION 83(b) ELECTION IS MY SOLE RESPONSIBILITY, EVEN IF I REQUEST THE
COMPANY OR ITS REPRESENTATIVES TO FILE SUCH ELECTION ON MY BEHALF.

    

    I understand that I am purchasing the
Shares pursuant to the terms of the Plan, the Notice and my Agreement, copies of
which I have received and carefully read and understand.

    

    
      	 
      	
              Very
      truly yours,

            
	 
      	 
      
	 	 
	 
      	 
      
	 
      	
              (Signature)

            

    

    

    

    Receipt
of the above is hereby acknowledged.

    

    ZONES,
INC.

    

    
      	
              By:

            	 
      	 
      

    

    

    
      	
              Title:

            	 
      	 
      

    

    

    
      	
              Dated:

            	 
      	 
      

    

     

     

    2ex4_1.htm

    
      

    

    

    
      	
              Exhibit
      4.1

            	
              Form
      of warrant.

            

    

    

    

    FORM

     

    OF

     

    COMMON
STOCK PURCHASE WARRANT

    

     HYPERDYNAMICS
CORPORATION

     

    
      	
              Warrant
      Shares: _______

            	
              Initial
      Exercise Date: May 12, 2008

            

    

     

    

     

    THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, _____________ (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise
Date”) and on or prior to the close of business on the seventh year anniversary of
the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Hyperdynamics
Corporation, a Delaware corporation (the “Company”), up to
______ shares (the “Warrant Shares”) of
Common Stock.   The purchase price of one share of Common Stock
under this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).

     

    Section 1.     Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated May 11, 2008, among the Company and the purchasers signatory
thereto.

     

    Section 2.     Exercise.

     

    a)           Exercise of
Warrant.  Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within 3 Trading Days of the date
said Notice of Exercise is delivered to the Company, the Company shall have
received  payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer or cashier’s check drawn on a United States
bank.  Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the Company until
the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within 3 Trading Days of the date
the final Notice of Exercise is delivered to the Company.  Partial
exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased.  The
Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases.  The Company shall
deliver any objection to any Notice of Exercise Form within 1 Business Day of
receipt of such notice.  In the event of any dispute or discrepancy,
the records of the Holder shall be controlling and determinative in the absence
of manifest error. The Holder
and any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount stated on the
face hereof.

     

    
      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

    

    b)           Exercise
Price.  The exercise price per share of the Common Stock under
this Warrant shall be $3.27, subject to adjustment
hereunder (the “Exercise
Price”).

     

    c)           Cashless
Exercise.  If at any time during the term of this Warrant there
is no effective Registration Statement registering, or no current prospectus
available for, the issuance or resale of the Warrant Shares by the Holder, then
this Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate for the
number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:

     

    
      	
               
      

            	
               (A)
      = the VWAP on the Trading Day immediately preceding the date of such
      election;

            

    

    
       

      
        	
                 
      

              	
                 (B)
      = the Exercise Price of this Warrant, as adjusted;
  and

              

      

      
        
           

          
            	
                     
      

                  	
                     (X)
      = the number of Warrant Shares issuable upon exercise of this Warrant in
      accordance with the terms of this Warrant by means of a cash exercise
      rather than a cashless
exercise.

                  

          

           

        

      

    

    Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this Section
2(c).

    

    d)           Exercise
Limitations.

     

    i.           Holder’s
Restrictions.  The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any portion of
this Warrant, pursuant to Section 2 or otherwise, to the extent that after
giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any
other person or entity acting as a group together with the Holder or any of the
Holder’s Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below).  For purposes of the foregoing
sentence, the 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 such determination is being
made, but shall exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion of this
Warrant 

    
       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

     

    beneficially
owned by the Holder or any of its Affiliates and (B) exercise or conversion of
the unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other  Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its
affiliates.  Except as set forth in the preceding sentence, for purposes of
this Section 2(d)(i), beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith.   To the extent
that the limitation contained in this Section 2(d)(i) applies, the determination
of whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination.   In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  For purposes of this Section 2(d)(i), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report, as the case may be, (B) a more recent public
announcement by the Company or (C) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of a Holder, the Company
shall within two Trading Days confirm orally and 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 conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.  The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant.  The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(d)(i), provided
that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(d)(i) shall continue to
apply.  Any such increase or decrease will not be effective until the
61st
day after such notice is delivered to the Company.  The provisions of
this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2(d)(i) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.

     

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    ii.           Issuance
Restrictions.  If the Company has not obtained Shareholder
Approval, then the Company may not issue upon exercise of this Warrant a number
of shares of Common Stock, which, when aggregated with any shares of Common
Stock issued (A) pursuant to the Purchase Agreement, (B) upon prior exercise of
this or any other Warrant issued pursuant to the Purchase Agreement and (C)
pursuant to any warrants issued to any registered broker-dealer as a fee in
connection with the issuance of Securities pursuant to the Purchase Agreement,
would exceed ______________1, subject
to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of the Purchase Agreement (such number of shares, the “Issuable
Maximum”).  The Holder and the holders of the other Warrants
issued pursuant to the Purchase Agreement shall be entitled to a portion of the
Issuable Maximum equal to the quotient obtained by dividing (x) the Holder’s
original Subscription Amount by (y) the aggregate original Subscription Amount
of all holders pursuant to the Purchase Agreement. In addition, the Holder may
allocate its pro-rata portion of the Issuable Maximum among Warrants held by it
in its sole discretion. Such portion shall be adjusted upward ratably in the
event a Purchaser no longer holds any Warrants and the amount of shares issued
to such Purchaser pursuant to its Warrants was less than such Purchaser’s
pro-rata share of the Issuable Maximum.  For avoidance of doubt,
unless and until any required Shareholder Approval is obtained and effective,
warrants issued to any registered broker-dealer as a fee in connection with the
Securities issued pursuant to the Purchase Agreement as described in (C) above
shall provide that such warrants shall not be allocated any portion of the
Issuable Maximum and shall be unexercisable unless and until such Shareholder
Approval is obtained and effective.

     

    e)           Mechanics of
Exercise.

     

    i.           Delivery of Certificates
Upon Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is then a participant in such system and either (A) there is an
effective Registration Statement permitting the resale of the Warrant Shares by
the Holder or this Warrant is being exercised via cashless exercise, and
otherwise by physical delivery to the address specified by the Holder in the
Notice of Exercise within 3 Trading Days from the delivery to the Company of the
Notice of Exercise Form, surrender of this Warrant (if required) and payment of
the aggregate Exercise Price as set forth above (the “Warrant Share Delivery
Date”).  This Warrant shall be deemed to have been exercised on
the date the Exercise Price is received by the Company.  The Warrant
Shares shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the Warrant has been exercised
by payment to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(e)(vi) prior to the issuance of such shares, have been paid. If the
Company fails for any reason to deliver to the Holder certificates evidencing
the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, the Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP of the Common Stock on the date of the applicable Notice of
Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth
Trading Day after such liquidated damages begin to accrue) for each Trading Day
after such Warrant Share Delivery Date until such certificates are
delivered.

     

     

      
        

      

    

    
      	
              1

            	
              19.999%
      of the number of shares of Common Stock outstanding on the Trading Day
      immediately preceding the Closing
Date

            

    

     

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    ii.           Delivery of New Warrants
Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

     

    iii.           Rescission
Rights.  If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to Section 2(e)(i) by the Warrant Share Delivery Date,
then the Holder will have the right to rescind such exercise.

     

    iv.          Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver to
the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss.  Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

     

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    v.           No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall, at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.

     

    vi.          Charges, Taxes and
Expenses.  Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

     

    vii.        
Closing of
Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

     

    f)           Call
Provision.  Subject to the provisions of Section 2(d) and this
Section 2(f), if, after the Effective Date, (i) the VWAP for each of 20 consecutive Trading Days
(the “Measurement
Period,” which 20 consecutive Trading Day period shall not have commenced
until after the Effective Date) exceeds $6.54 (subject to adjustment
for 

     

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

     

    forward
and reverse stock splits, recapitalizations, stock dividends and the like after
the Initial Exercise Date), (ii) the daily volume for each Trading Day during
such Measurement Period exceeds $250,000 and (iii) the Holder
is not in possession of any information that constitutes, or might constitute,
material non-public information which was provided by the Company, then the
Company may, within 1 Trading Day of the end of such Measurement Period, call
for cancellation of all or any portion of this Warrant for which a Notice of
Exercise has not yet been delivered (such right, a “Call”) for
consideration equal to $0.001 per Share.  To exercise this right, the
Company must deliver to the Holder an irrevocable written notice (a “Call Notice”),
indicating therein the portion of unexercised portion of this Warrant to which
such notice applies.  If the conditions set forth below for such Call
are satisfied from the period from the date of the Call Notice through and
including the Call Date (as defined below), then any portion of this Warrant
subject to such Call Notice for which a Notice of Exercise shall not have been
received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on
the tenth Trading Day after the date the Call Notice is received by the Holder
(such date and time, the “Call
Date”).  Any unexercised portion of this Warrant to which the
Call Notice does not pertain will be unaffected by such Call
Notice.  In furtherance thereof, the Company covenants and agrees that
it will honor all Notices of Exercise with respect to Warrant Shares subject to
a Call Notice that are tendered through 6:30 p.m. (New York City time) on the
Call Date.  The parties agree that any Notice of Exercise delivered
following a Call Notice which calls less than all the Warrants shall first
reduce to zero the number of Warrant Shares subject to such Call Notice prior to
reducing the remaining Warrant Shares available for purchase under this
Warrant.  For example, if (A) this Warrant then permits the Holder to
acquire 100 Warrant Shares, (B) a Call Notice pertains to 75 Warrant Shares, and
(C) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders
a Notice of Exercise in respect of 50 Warrant Shares, then (x) on the Call Date
the right under this Warrant to acquire 25 Warrant Shares will be automatically
cancelled, (y) the Company, in the time and manner required under this Warrant,
will have issued and delivered to the Holder 50 Warrant Shares in respect of the
exercises following receipt of the Call Notice, and (z) the Holder may, until
the Termination Date, exercise this Warrant for 25 Warrant Shares (subject to
adjustment as herein provided and subject to subsequent Call
Notices).  Subject again to the provisions of this Section 2(f), the
Company may deliver subsequent Call Notices for any portion of this Warrant for
which the Holder shall not have delivered a Notice of
Exercise.  Notwithstanding anything to the contrary set forth in this
Warrant, the Company may not deliver a Call Notice or require the cancellation
of this Warrant (and any such Call Notice shall be void), unless, from the
beginning of the Measurement Period through the Call Date, (1) the Company shall
have honored in accordance with the terms of this Warrant all Notices of
Exercise delivered by  6:30 p.m. (New York City time) on the Call
Date, and (2) the Registration Statement shall be effective as to all Warrant
Shares and the prospectus thereunder available for use by the Holder for the
resale of all such Warrant Shares, and (3) the Common Stock shall be listed or
quoted for trading on the Trading Market, and (4) there is a sufficient number
of authorized shares of Common Stock for issuance of all Securities under the
Transaction Documents, and (5) the issuance of the shares shall not cause a
breach of any provision of 2(d) herein.  The Company’s right to call
the Warrants under this Section 2(f) shall be exercised ratably among the
Holders based on each Holder’s initial purchase of Warrants.

     

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    Section 3.     Certain
Adjustments.

     

    a)           Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(i) pays 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 (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise 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 immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged.  Any
adjustment made pursuant to this Section 3(a) 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.

     

    b)           Subsequent Equity
Sales. If the Company or any Subsidiary thereof, as applicable, at any
time while this Warrant is outstanding, shall sell or grant any option to
purchase, or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock, at an effective price per share less than the
then Exercise Price (such lower price, the “Base Share Price” and
such issuances collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall
at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights per share which are issued in connection with
such issuance, be entitled to receive shares of Common Stock at an effective
price per share which is less than the Exercise Price, such issuance shall be
deemed to have occurred for less than the Exercise Price on such date of the
Dilutive Issuance), then, the Exercise Price shall be reduced and only reduced
to equal the Base Share Price and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price, shall
be equal to the aggregate Exercise Price prior to such
adjustment.  Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued.  Notwithstanding the
foregoing, no adjustments shall be made, paid or issued under this Section 3(b)
in respect of an Exempt Issuance.  The Company shall notify the
Holder, in writing, no later than the Trading Day following the issuance of any
Common Stock or Common Stock Equivalents subject to this Section 3(b),
indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice, the
“Dilutive Issuance
Notice”).  For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon
the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based upon
the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise.

     

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    c)           Subsequent Rights
Offerings.  If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the VWAP at the record date
mentioned below, then, the Exercise Price shall be multiplied by a fraction, of
which the denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the numerator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered (assuming receipt by the Company in full of all consideration payable
upon exercise of such rights, options or warrants) would purchase at such
VWAP.  Such adjustment shall be made whenever such rights or warrants
are issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.

     

    d)           Pro Rata
Distributions.  If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to
Holders of the Warrants) evidences of its indebtedness or assets (including cash
and cash dividends) or rights or warrants to subscribe for or purchase any
security other than the Common Stock (which shall be subject to Section 3(b)),
then in each such case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
one outstanding share of the Common Stock as determined by the Board of
Directors in good faith.  In either case the adjustments shall be
described in a statement provided to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock.  Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.

     

    e)           Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the
Company effects any merger or consolidation of the Company with or into another
Person, (ii) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of 

     

     

    
       

      
        
          
             

          

          
            9

            
              

            

          

          
             

          

        

      

      
Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property or (iv) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(each “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate
Consideration”) receivable as a result of such merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. For purposes
of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction.  To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 3(e)
and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a
Fundamental Transaction involving a person or entity not traded on a national
securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market,
or the Nasdaq Capital Market, the Company or any successor entity shall pay at
the Holder’s option, exercisable at any time concurrently with or within 30 days
after the consummation of the Fundamental Transaction, an amount of cash equal
to the value of this Warrant as determined in accordance with the Black Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using (A)
a price per share of Common Stock equal to the VWAP of the Common Stock for the
Trading Day immediately preceding the date of consummation of the
applicable  Fundamental Transaction, (B) a risk-free interest rate
corresponding to the U.S. Treasury rate for 30 day period immediately prior to
the consummation of the applicable Fundamental Transaction, (C) an expected
volatility equal to the 100 day volatility obtained from the “HVT” function on
Bloomberg L.P. determined as of the Trading Day immediately following the public
announcement of the applicable Fundamental Transaction, and (D) a remaining
option time equal to the time between the date of the public announcement of
such transaction and the Termination Date.

    

     

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

     

    f)           Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

     

    g)           Notice to
Holder.

     

    i.         
 Adjustment to
Exercise Price. Whenever the Exercise Price is adjusted pursuant to any
provision of this Section 3, the Company shall promptly mail to the Holder a
notice setting forth the Exercise Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment. If the Company enters
into a Variable Rate Transaction, despite the prohibition thereon in the
Purchase Agreement, the Company shall be deemed to have issued Common Stock or
Common Stock Equivalents at the lowest possible conversion or exercise price at
which such securities may be converted or exercised.

     

    ii.           Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  The Holder is
entitled to exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice.

     

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    
       

      Section
4.             Transfer of
Warrant.

    

    

    a)           Transferability.  This
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such
transfer.  Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  The Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.

     

    b)           New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the Initial Exercise Date and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant thereto.

     

    c)           Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.

     

    Section
5.             Miscellaneous.

     

    a)           No Rights as Stockholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a stockholder of the Company prior to the
exercise hereof as set forth in Section 2(e)(i).

     

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    b)           Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

     

    c)           Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.

     

    d)           Authorized
Shares.

     

    The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed.  The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

     

    Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate 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 of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment.  Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this
Warrant.

    

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

    

    Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     

    e)           Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

    f)         
  Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

     

    g)           Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

     

    h)           Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

     

    i)         
  Limitation
of Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    j)         
  Remedies.  The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.

     

    
      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    

    

    k)           Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.

     

    l)        
   Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and Holders holding Warrants at least equal to
67% of the Warrant Shares issuable upon exercise of all then outstanding
Warrants.

     

    m)           Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

     

    n)           Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

    

    ********************

    

    (Signature
Pages Follow)

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.

    

    

    
      	 
      	
              HYPERDYNAMICS
      CORPORATION

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

            
	 
      	 
      	
              Title:

            

    

    

    
      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    

    

    NOTICE
OF EXERCISE

    

    
      	
              TO:

            	
              HYPERDYNAMICS
      CORPORATION

            

    

    

    (1)           The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    (2)           Payment
shall take the form of (check applicable box):

     

    £  in
lawful money of the United States; or

     

    £ [if permitted]
the cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).

     

    (3)           Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    
      
        	
                 

              	
                _______________________________

              

      

    

    

    

    The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

    

    
      
        	
                 

              	
                _______________________________

              

      

    

    

    
      
        	
                 

              	
                _______________________________

              

      

    

    

    
      
        	
                 

              	
                _______________________________

              

      

    

    

    

    [SIGNATURE
OF HOLDER]

    

    Name of
Investing Entity:
_______________________________________________________________________

    Signature of Authorized Signatory of
Investing Entity:
_________________________________________________

    Name of
Authorized Signatory:
___________________________________________________________________

    Title of
Authorized Signatory:
____________________________________________________________________

    Date:
_______________________________________________________________________________________

    

    
      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

     

    ASSIGNMENT
FORM

    

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

    

    

    FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to

     

    

    _______________________________________________
whose address is

    

    _______________________________________________________________.

    

    

    _______________________________________________________________

    

    
      	
               
      

            	
              Dated:  ______________,
      _______

            

    

    

    

    
      
        	
              	
                Holder’s
      Signature:

              	
                _____________________________

              

      

    

    

    
      
        	
                
                

              	
                Holder’s
      Address:

              	
                _____________________________

              

      

    

    

    
      
        	
                 

              	
                _____________________________

              

      

    

    

    

    Signature
Guaranteed:  ___________________________________________

    

    

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

     

     

    18

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