WARRANT TO PURCHASE COMMON STOCK of MDU COMMUNICATIONS INTERNATIONAL, INC.
Exhibit
10.3
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES
FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY PURSUANT TO AN EXEMPTION FROM REGISTRATION IN
ACCORDANCE WITH RULE 144 (IF AVAILABLE) UNDER THE SECURITIES ACT, OR PURSUANT
TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE
IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.
No.
W-____
Warrant
to Purchase 375,000 Shares of
Common
Stock (subject to adjustment)
WARRANT
TO PURCHASE COMMON STOCK
of
MDU
COMMUNICATIONS INTERNATIONAL, INC.
This
Warrant (the “Warrant”)
is
issued to __________________ or
his,
her or its permitted assigns (“Holder”)
by MDU
COMMUNICATIONS INTERNATIONAL, INC., a Delaware corporation (the “Company”),
on
June 30, 2008 (the “Warrant
Issue Date”)
for
agreed upon consideration, receipt of which is hereby acknowledged.
This
Warrant is one of one or more Warrants of the same form and having the same
terms as this Warrant entitling the holders initially to purchase up to an
aggregate of 375,000 shares of Common Stock. In order to induce the Holder
and
the other Lenders to enter into that certain Amended and Restated Loan and
Security Agreement dated as of June 30, 2008 by and among MDU Communications
(USA) Inc. and the Lenders (including all annexes, exhibits and schedules
thereto and as from time to time amended, restated, supplemented or otherwise
modified the “Loan Agreement”). The Holder is entitled to certain benefits as
set forth therein.
1. Purchase
Shares.
Subject
to the terms and conditions hereinafter set forth, the Holder is entitled,
upon
surrender of this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in writing), to
purchase from the Company up to 375,000 shares of common stock, par value $0.001
per share (“Common
Stock”),
of
the Company (the “ Warrant
Share”)
at the
Exercise Price (defined below), subject to adjustment as provided in Section
8
hereof.
2. Exercise
Price.
The
purchase price for the Warrant Share shall be $0.60 per Warrant Share, as
adjusted from time to time pursuant to Section 8 hereof (the “Exercise
Price”).
3. Exercise
Period.
This
Warrant may be exercised at any time after the date hereof until 5:00 p.m.,
New
York City time, June 30, 2013.
4.
Company's Obligation to Make Payments
(a) The
Company shall not declare, make or pay any dividend or other distribution,
whether in cash, securities or other property, with respect to its Common Stock
(a "Distribution") unless it concurrently makes a cash payment to the holder
of
this Warrant equal to the product of (1) the amount of cash plus the Fair Value
of any property or securities distributed with respect to each outstanding
share
of Common Stock multiplied by (2) the number of shares of Common Stock then
issuable upon exercise of this Warrant.
(b) Tag-Along Rights.
Each
holder of a Warrant shall have the right to tag along in the sale of any Common
Stock by the Company, in accordance with the letter agreement addressed to
each
holder, and any assignee, transferee or successor, a copy of which is attached
hereto and made a part hereof.
(c) "Fair
Value"
for the
purposes hereunder means the fair value of the appropriate security, property,
assets, business or entity (taking into account the value to such business
or
entity of any covenant not to compete in favor thereof) as determined by an
opinion of an independent investment banking firm of national reputation (which
may be the firm regularly retained by the Company) selected by the Company
and
reasonably acceptable to the holder(s) of this Warrant or, (who, if more than
one, shall agree among themselves by a two-thirds majority). In the case of
any
event which gives rise to a requirement to determine "Fair Value" pursuant
to
this Warrant, the Company shall be responsible for initiating the process by
which Fair Value shall be determined as promptly as practicable, but in any
event within thirty (30) days, following such event. Such investment banking
firm shall determine the fair value of the security, property, assets, business
or entity, as the case may be, in question and deliver its opinion in writing
to
the Company and to each such holder. The determination so made shall be
conclusive and binding on the Company and such holders. The fees and expenses
of
any such determination made by such investment banking firm shall be borne
by
the Company. In determining Fair Value, no discount shall be imposed by reason
of a minority ownership interest or the illiquidity of the stock interest being
valued. The Fair Value of the Warrant Shares shall be determined (a) without
regard to the fact that the Warrant Shares may constitute a minority ownership
interest in a closely held corporation and (b) without taking into account
any
obligation of the Company to repurchase the Warrant or the Warrant Shares
pursuant to the terms of this Warrant. Notwithstanding the foregoing, if the
Company shall have effected a public offering of Common Stock and the Common
Stock is traded on a public market, Fair Value means, with reference to the
Warrant Shares, the Current Market Price (as defined below) of the Common Stock
as of any date of determination.
5. Method
of Exercise.
While
this Warrant remains outstanding and exercisable in accordance with Section
3
above, the Holder may exercise, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(a) the
surrender of the Warrant, together with a duly executed copy of the form of
Notice of Exercise attached hereto, to the Secretary of the Company at its
principal offices set forth on the signature page hereof; and
(b) the
payment in the form of a certified or bank cashier’s check payable to the order
of the Company in an amount equal to the Exercise Price multiplied by the number
of Warrant Shares for which this Warrant is being exercised. At the option
of
such holder, payment of the Exercise Price may be made by deduction from the
number of shares delivered upon exercise of the Warrant of a number of shares
which has an aggregate Current Market Price on the date of exercise equal to
the
aggregate Exercise Price for all shares to be purchased pursuant to this
Warrant.
(c)
"Current Market Price"
as to
any security on any date specified herein means the average of the daily closing
prices for the thirty (30) consecutive trading days before such date excluding
any trades which are not bona fide arm's length transactions. Unless otherwise
requested by the holder hereof, this Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued, and the holder or transferee so designated in the Notice of Exercise
shall be deemed to have become the holder of record of such shares for all
purposes, as of the close of business on the date on which each of the Notice
of
Exercise, payment of the Exercise Price (unless a cashless exercise is being
effected) and this Warrant are received by the Company.
6. Certificates
for Shares.
Upon
the exercise of the purchase rights evidenced by this Warrant, one or more
certificates for the number of Warrant Shares so purchased shall be issued
as
soon as practicable thereafter (with appropriate restrictive legends, if
applicable), and in any event within six (6) business days of the delivery
of
the Notice of Exercise.
7. Issuance
of Shares.
The
Company covenants that the Warrant Shares, when issued pursuant to the exercise
of this Warrant, will be duly and validly issued, fully paid and nonassessable
and free from all taxes, liens, and charges with respect to the issuance
thereof.
8. Adjustment
of Exercise Price and Kind and Number of Shares.
The
number and kind of securities purchasable upon exercise of this Warrant and
the
Exercise Price shall be subject to adjustment from time to time as
follows:
(a) Subdivisions,
Combinations and Other Issuances.
If the
Company shall at any time prior to the expiration of this Warrant (i) subdivide
its Common Stock, by split-up or otherwise, or combine its Common Stock, or
(ii)
issue additional shares of its Common Stock or other equity securities as a
dividend with respect to any shares of its Common Stock; the number of shares
of
Common Stock issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision (by stock split, stock
dividend or otherwise), or proportionately decreased in the case of a
combination. Appropriate adjustments shall also be made to the Exercise Price
payable per share, but the aggregate Exercise Price payable for the total number
of Warrant Shares purchasable under this Warrant (as adjusted) shall remain
the
same. Any adjustment under this Section 8(a) shall become effective at the
close
of business on the date the subdivision or combination becomes effective, or
as
of the record date of such dividend, or in the event that no record date is
fixed, upon the making of such dividend. In the event of a Dilutive Transaction
(as defined below), the number of Warrant Shares thereafter purchasable upon
exercise of each Warrant shall be determined by multiplying the number of shares
of Common Stock theretofore purchasable upon exercise of such Warrant by a
fraction, the numerator of which is shall be the fully-diluted number of shares
of Common Stock outstanding immediately after such sale or issuance and the
denominator of which shall be the fully-diluted number of shares of Common
Stock
outstanding immediately prior to such sale or issuance plus the number of shares
of Common Stock which the aggregate consideration received for such sale or
issuance would purchase at the greater of (i) the Exercise Price per share
then
in effect or (ii) the then Fair Value per share. “Aggregate consideration
received” shall include the premium or other consideration to be paid upon the
exercise or conversion of any security convertible into Common Stock.
"Dilutive
Transaction"
shall
mean any issuance by the Company (exclusive of issuances and transactions with
current employees) after the Closing Date of shares of Common Stock (or Stock
Purchase Rights or Convertible Securities that would permit the purchase of
Common Stock) for a consideration less than the greater of (i) the Exercise
Price per share then in effect or (ii) the then Fair Value per share. Within
twenty (20) days after the receipt of such a notice, (i) the Company shall
issue
to the holder of this Warrant, for no additional consideration, additional
warrants to acquire, at an exercise price equal to the proposed sale price
of
the shares being issued, a number of shares of Common Stock equal to the number
of shares then being issued by the Company multiplied by such holder's
percentage of the then total number of outstanding shares of Common Stock
represented by the then outstanding Warrant and (ii) the holder of issued
Warrant Shares shall have the right (but not the obligation) to inform the
Company in writing that such holder elects to have issued to it, at the price
equal to the proposed sale price of the other shares then being issued, a number
of shares of Common Stock equal to the number of other shares then being issued
multiplied by the percentage of the total number of outstanding shares of Common
Stock represented by the issued warrant shares then held by the
holder.
(b) Reclassification,
Reorganization and Consolidation.
In case
of any reclassification, capital reorganization, or change in the Common Stock
of the Company (other than as a result of a subdivision, combination, or stock
dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization, or change, lawful provision shall be made,
and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at
any
time prior to the expiration of this Warrant to purchase, at a total price
equal
to that payable upon the exercise of this Warrant (subject to adjustment of
the
Exercise Price as provided in Section 8), the kind and amount of shares of
stock
and other securities and property receivable in connection with such
reclassification, reorganization, or change by a holder of the same number
of
shares of Common Stock as were purchasable by the Holder immediately prior
to
such reclassification, reorganization, or change. In any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to
any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the purchase price per
share payable hereunder, provided the aggregate Exercise Price shall remain
the
same.
(c) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding, (1) the Company effects any merger
or consolidation of the Company with or into another person or entity, (2)
the
Company effects any sale of all or substantially all of its assets in one or
a
series of related transactions, (3) any tender offer or exchange offer (whether
by the Company or another person or entity) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, or (4) 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 (in any such case, a “Fundamental
Transaction”),
then
the Holder shall have the right to purchase and receive upon the basis and
upon
the terms and conditions herein specified and in lieu of the Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, such shares
of
stock, securities or assets (including cash) as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal
to
the number of Warrant Shares immediately theretofore issuable upon exercise
of
the Warrant, had such Fundamental Transaction not taken place.
(d) Notice
of Adjustment.
When
any adjustment is required to be made in the number or kind of shares
purchasable upon exercise of the Warrant, or in the Exercise Price, the Company
shall promptly notify the holder of such event and of the number of shares
of
Common Stock or other securities or property thereafter purchasable upon
exercise of this Warrant.
(e) Issuance
of New Warrant.
Upon
the occurrence of any of the events listed in this Section 8 that results in
an
adjustment of the type, number or exercise price of the securities underlying
this Warrant, the Holder shall have the right to receive a new warrant
reflecting such adjustment upon the Holder tendering this Warrant in exchange.
The new warrant shall otherwise have terms identical to this
Warrant.
9. Covenants
and Conditions.
(a) No
Impairment.
Pursuant to the terms and conditions of this Warrant, Company shall: (i) reserve
an appropriate number of shares of Company’s Common Stock to facilitate the
issuance of shares to Holder pursuant to this Warrant, (ii) not take any action
that would materially impair Company’s ability to comply with the terms of the
Warrant, and (iii) provide Holder with at least ten (10) days prior written
notice of the record date for any proposed dividend or distribution by the
Company.
(b) Registration
Rights Agreement.
The
Company and the Holder shall enter into a Registration Rights Agreement (the
“Registration
Rights Agreement”)
simultaneously with the execution of the Warrant on terms mutually agreeable
to
both parties.
10. No
Fractional Shares or Scrip.
No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant, but in lieu of such fractional shares the Company
shall make a cash payment therefor on the basis of the Exercise Price then
in
effect, unless such cash payment is less than one dollar ($1.00).
11. No
Stockholder Rights.
Prior
to exercise of this Warrant, the Holder shall not be entitled to any rights
of a
stockholder with respect to the shares of Common Stock issuable on the exercise
hereof, including (without limitation) the right to vote such shares of Common
Stock, receive dividends or other distributions thereon, exercise preemptive
rights or be notified of stockholder meetings, and such holder shall not be
entitled to any notice or other communication concerning the business or affairs
of the Company. However, nothing in this Section 11 shall limit the right of
the
Holder to be provided the notices required under this Warrant.
12. Successors
and Assigns.
The
terms and provisions of this Warrant shall inure to the benefit of, and be
binding upon, the Company and the Holder and their respective successors and
assigns.
13. Amendments
and Waivers.
Any
term of this Warrant may be amended and the observance of any term of this
Warrant may be waived (either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the Company and
the
Holder. Any waiver or amendment effected in accordance with this Section 13
shall be binding upon each holder of any shares of Common Stock purchased under
this Warrant at the time outstanding (including securities into which such
shares have been converted), each future holder of all such Shares, and the
Company.
14. Notices.
Any
notice, demand or other communication which any party hereto may be required,
or
may elect, to give to anyone interested hereunder shall be sufficiently given
if
delivered via fax, personally or by nationally recognized overnight courier
service or sent by registered or certified mail, return receipt requested,
addressed to such address as may be given herein, and, except as otherwise
noted
herein, must be addressed as follows:
if
to the Company, to:
MDU
Communications International, Inc.
00-X
Xxxxxxxx Xxx
Xxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxxxx Xxxxxx
Facsimile:
(000) 000-0000
if
to the
Holder, to the Holder’s address as set forth on the Holder's signature page to
the Purchase Agreement, marked for attention as there indicated,
or
to
such other address as the party to whom notice is to be given may have furnished
to the other parties in writing in accordance with the provisions of this
Section 14. Any such notice or communication will be deemed to have been
received: (A) in the case of facsimile, e-mail or personal delivery, on the
date
of such delivery; (B) in the case of nationally-recognized overnight courier,
on
the next business day after the date sent; and (C) if by registered or certified
mail, on the third business day following the date postmarked.
15. Attorneys’
Fees.
If any
action of law or equity is necessary to enforce or interpret the terms of this
Warrant, the prevailing party shall be entitled to its reasonable attorneys’
fees, costs and disbursements in addition to any other relief to which it may
be
entitled.
16. Captions.
The
section and subsection headings of this Warrant are inserted for convenience
only and shall not constitute a part of this Warrant in construing or
interpreting any provision hereof.
17. Governing
Law.
This
Warrant shall be governed by the laws of the State of New York, without regard
to the provisions thereof relating to conflict of laws.
IN
WITNESS WHEREOF, MDU Communications International, Inc. caused this Warrant
to be executed by an officer thereunto duly authorized.
|
|
MDU
COMMUNICATIONS INTERNATIONAL, INC.
|
||
|
|
|
||
|
Date: ______________________
|
By:
|
||
|
Xxxxxxx
Xxxxxx
|
|||
|
|
President
and Chief Executive Officer
|
||
|
Attest:
|
|
|
By: ______________________________________
|
|
|
Name: ___________________________________
|
|
|
Title: ____________________________________
|
|
| (a) |
NOTICE
OF EXERCISE
|
| To: |
MDU
Communications International, Inc.
|
| Attn: |
Corporate
Secretary
|
The
undersigned hereby elects to:
Purchase
_________________ shares of Common Stock of MDU Communications
International, Inc., pursuant to the terms of the attached Warrant and payment
of the Exercise Price per share required under such Warrant accompanying this
notice.
The
undersigned hereby represents and warrants that the undersigned is acquiring
such shares for its own account for investment purposes only, and not for resale
or with a view to distribution of such shares or any part thereof.
HOLDER:
|
By:______________________________________________
|
|
|
By:______________________________________________
|
|
Address:
Date:
Name
in
which shares should be registered:
TAG-ALONG
RIGHTS AGREEMENT
To
Each
Holder of a Warrant to Purchase Common Stock of MDU Communications
International, Inc. and all Assignees, Transferees and Successors of such
Holder:
Reference
is made to the Warrants to Purchase Common Stock of MDU Communications
International, Inc (the "Warrant(s)") issued pursuant to the Amended and
Restated Loan and Security Agreement between MDU Communications (USA), Inc.
and
______________________ dated as of June 30, 2008. All capitalized terms used
in
this agreement which are defined in the Warrants are used as defined in the
Warrants unless the context otherwise requires.
The
undersigned, MDU Communications International, Inc., a Delaware corporation
("MDUC"), warrants, covenants and agrees with the holders of the Warrants,
their
assignees, transferees and successors (the "Warrantholders") as
follows:
If
the
undersigned proposes any sale (other than pursuant to a public offering) (a
"Sale") of Common Stock ("Common Stock") (or any securities convertible into
or
exercisable or exchangeable for Common Stock), that in total exceeds thirty
(30%) of the then issued and outstanding number of shares of Common Stock,
then
it shall permit each Warrantholder to participate as a seller in such
transaction such that such Warrantholder exercising his or its right of co-sale
hereunder shall be entitled to sell a percentage of the Warrants which, if
exercised, would equal one share of Common Stock that the proposed purchaser
(a
"Proposed Purchaser") is willing to acquire in the transaction, times his or
its
respective percentage ownership, immediately prior to the sale, of all
outstanding common stock of all classes (assuming for purposes hereof full
exercise of all options, warrants and rights to acquire Common Stock of any
class, including, without limitation, the Warrants).
(a) The
undersigned shall give each Warrantholder written notice of a proposed Sale
of
Common Stock not less than 15 days before such Sale is to take place. The notice
("Sale Notice") shall set forth:
(i) the
name
and address of the Proposed Purchaser,
(ii) the
name
and address of each Warrantholder as shown on the records of the Company, the
number of Warrants held by each Warrantholder, and the number of shares of
Common Stock underlying each such Warrant,
(iii) the
number of shares of Common Stock proposed to be transferred and the number
of
shares issuable upon conversion, exercise or exchange of any other securities
to
be transferred by the undersigned,
(iv) the
proposed amount and form of consideration and terms and conditions of payment
offered by such Proposed Purchaser, and
(v) the
signed agreement of the Proposed Purchaser acknowledging that he or it has
been
informed of this letter agreement and has agreed to purchase Warrants in
accordance with the terms hereof.
(b) The
tag-along rights provided in this agreement may be exercised by any
Warrantholder (an "Electing Warrantholder") by delivery of a written notice
(the
"Tag-Along-Notice") to the undersigned (with a copy to each other Warrantholder)
within 30 days after receipt of the Sale Notice. The Tag-Along Notice shall
state the number of Warrants which the Warrantholder wishes to include in such
sale to the Proposed Purchaser.
(c) The
Proposed Purchaser shall purchase from each Electing Warrantholder the number
of
Warrants (or portion thereof) which, if exercised, would be equal to the number
of shares of Common Stock derived by multiplying (x) the number of shares of
Common Stock plus the number of shares issuable upon conversion, exercise or
exchange of any other securities to be purchased by the Proposed Purchaser
by a
fraction (y) the numerator of which is the number of shares of Common Stock
such
Electing Warrantholder wishes to transfer and the denominator of which is the
total number of underlying shares of all outstanding and Common Stock (assuming
for purposes hereof full exercise of all options, warrants and rights to acquire
Common Stock of any class, including, without limitation, the
Warrants).
(d) Any
Warrants purchased from the Warrantholders pursuant to this agreement shall
be
purchased at the same price per share (less the Warrant Exercise Price) and
otherwise on the same terms and conditions as the proposed Sale (it being
understood and agreed that such terms and conditions do not include the making
of any representations and warranties, indemnities or other similar Agreements
other than representations, warranties and indemnities as to the ownership
of
such Warrants and the due authority to sell such Warrants).
|
By:
|
|
|
Xxxxxxx
Xxxxxx
|
|
