STOCK OPTION AGREEMENT
THIS AGREEMENT made as of this 20th day of April, 2009 between The ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ Limited Partnership, a New York limited partnership, with its
principal address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(the "Optionor"), DED Enterprises Inc., a Florida corporation, with its
principal address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Optionee"),
Carpathian Holding Company, Ltd: Nevis ("CHC"), and Carpathian Resources, Ltd:
Australia ("CPN").
WHEREAS:
(A) The Optionor is the legal and/or beneficial owner of
1,494,933 shares (the "Optionor's Shares") of the common stock of
MDU Communications International, Inc., a Delaware corporation
(the "Corporation"); and
(B) The Optionor wishes to grant to the Optionee under the
terms and conditions contained herein, and the Optionee wishes to
accept from the Optionor, an option to purchase up to the entirety
of the Optionor's Shares (the "Optioned Shares").
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Optionor hereby grants to the Optionee an option (the
"Option") to purchase the Optioned Shares at a purchase price (the "Purchase
Price") of forty-eight U.S. cents (US$0.48) per share, upon and subject to the
following terms and conditions:
1. Option Exercise Period. The Option may be exercised by the
Optionee, in whole or in part (but in no case in tranches of less than 100,000
shares), at any time from the date hereof until March 9, 2012 (the
"Termination Date") and shall terminate on the Termination Date unless
exercised by the Optionee prior thereto.
2. Exercise of Option. The Optionee shall, for the purposes of
exercising the Option, give to the Optionor written notice (the "Exercise
Notice") thereof along with payment thereof in immediately available funds by
a bank check or a wire transfer payable to the Optionor, in the amount of the
Purchase Price.
3. Transfer of Optioned Shares. Upon compliance by the Optionee of
all of the terms and conditions of this Agreement and upon receipt by the
Optionor of (i) the Exercise Notice, and (ii) the Purchase Price, the Optionor
shall sell and transfer to the Optionee the Optioned Shares and as evidence
thereof, the Optionor shall execute in favor of the Optionee a form of
transfer and an endorsement on the share certificates representing the
Optioned Shares, together with such other documents to evidence the sale and
transfer as the Optionee reasonably requests. Optionor hereby warrants that
Optionor has the right to transfer the Optioned Shares to the Optionee, and
that Optionor will retain that right throughout the term of this Agreement.
4. Assignability of Option. The Optionee may sell, assign or
otherwise transfer the Option or any of its rights under this Agreement to any
Affiliate in the Optionee's discretion. In the event that the Optioned Shares
are transferred from the Optionor by operation of law (e.g., by dissolution or
levy) or transferred to an Affiliate of the Optionor prior to the Termination
Date, such transfer of the Optioned Shares shall be subject to the terms of
this Option.
5. Profit Participation. In consideration for the Option, upon each
sale of the Optioned Shares by the Optionee (or its Affiliate, as defined
below) to a Person which is not an Affiliate of the Optionee, (each such sale
referred to herein as a "Final Sale"), the Optionee shall pay to the Optionor
an amount equal to 50% of the difference between the amount realized in the
Final Sale (the aggregate sales price less any commissions payable as a result
of the Final Sale to a Person who is not an Affiliate of the Optionee) and the
aggregate Purchase Price. The Optionee (or its Affiliate) shall determine, in
its sole discretion whether, when, and at what price, to sell the Optioned
Shares; provided however, Optionee shall consult with Optionor, with respect
to any prospective sale of the Optioned Shares prior to such sale. Further
provided, Optionee shall give Optionor prompt notice (next business day) of
such Final Sale, and shall promptly remit (one day following Optionee's
receipt of sale proceeds) the amount of the sales proceeds due Optionor by
virtue of any such Final Sale, along with a detailed written accounting
therefor which shows in reasonable detail all calculations used to determine
the amount due to Optionor.
6. Optionee's Right of First Refusal. Prior to the exercise of the
Option, before any Optioned Shares held by the Optionor or any transferee of
the Optionor (either being sometimes referred to herein as the "Selling
Stockholder") may be sold or otherwise transferred, the Optionee or its
assignee(s) shall have a right of first refusal to acquire the Optioned Shares
on the terms and conditions set forth in this Section (the "Right of First
Refusal").
(a) The Selling Stockholder shall (a) deliver to the
Optionee a written notice (the "Notice") stating: (i) the Selling
Stockholder's bona fide intention to sell or otherwise transfer such Optioned
Shares; (ii) the name of each proposed purchaser or other transferee
("Proposed Transferee"); (iii) the number of Optioned Shares to be transferred
to each Proposed Transferee; (iv) the amount of the bona fide cash price or
other consideration for which the Selling Stockholder proposes to transfer the
Optioned Shares (the "Offered Price"); and (v) the material terms and
conditions of the proposed transfer (the "Offer Terms") and (b) offer the
Optioned Shares at the Offered Price and on the Offer Terms to the Optionee or
its assignee(s).
(b) Within one business day after receipt of the Notice,
the Optionee and/or its assignee(s) may, by giving written notice to the
Selling Stockholder, elect to purchase all, but not less than all, of the
Optioned Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price and on the terms determined in accordance
with subsection (c) below.
(c) The purchase price for the Optioned Shares purchased by
the Optionee or its assignee(s) under this Section 6 shall be the Offered
Price, and the terms and conditions of the transfer shall be identical in all
material respects to the Offer Terms (the "Terms"). If the Offered Price
includes consideration other than cash, the cash equivalent value of the non-
cash consideration shall be determined by the Board of Directors of the
Corporation in good faith and such determination shall be final and binding
upon the parties.
(d) Payment of the purchase price under this Section 6
shall be made in cash, immediately available funds by a bank check or wire
transfer of funds, in any case in accordance with the Terms.
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(e) If all of the Optioned Shares proposed in the Notice to
be transferred to a given Proposed Transferee are not purchased by the
Optionee and/or its assignee(s) as provided in this Section, then the Selling
Stockholder may sell or otherwise transfer such Optioned Shares to the
Proposed Transferee at the Offered Price or at a higher price and on the Offer
Terms (each such sale referred to herein as an "Optionor Sale"), provided that
such Optionor Sale or other transfer is consummated within 60 days following
such Notice, and in such event, Optionor shall promptly pay the Optionee an
amount equal to 50% of the following: (i) the total number of shares sold
pursuant to such Option Sale multiplied by (ii) the number resulting from (y)
forty-eight U.S. cents (US$0.48) per share minus (z) the net sales price
(sales price per share less any commissions paid to third parties) per share.
If the net sales price does not exceed $0.48 per share, then no amounts will
be payable to the Optionee hereunder. If the Optioned Shares described in the
Notice are not transferred to the proposed Transferee within such period, a
new Notice shall be given to the Optionee, and the Optionee and/or its
assignees shall again be offered the Right of First Refusal before any
Optioned Shares held by the Selling Stockholder may be sold or otherwise
transferred.
7. Accounting and Access to Records. The Optionee shall maintain
complete, clear and accurate records in sufficient detail to enable the
amounts payable hereunder to be determined. The Optionor shall be entitled to
reasonable access to such records for the purpose of inspection and copying.
Specifically, such records shall be open to inspection by the Optionor and
subject to an annual audit and periodic reproduction by its agents or
representatives for the purpose of verifying their accuracy during normal
business hours and upon reasonable prior notice (as well as reasonable access
to the accountants, attorneys and others who have prepared or maintained such
records). If such annual audit reveals any errors or inaccuracies in any
amounts paid or due to be paid by the Optionee to the Optionor hereunder, then
such amount shall be promptly paid. Any such audits shall be conducted at the
Optionor's expense, unless such audit reveals a discrepancy of 5% or greater
in the amount due to the Optionor, in which case the Optionee shall be
responsible for all costs and expenses in connection with such audit.
8. Board Representation. If, during the term of this Agreement, the
Optionee acquires a Controlling Interest in the Corporation, the Optionor
shall be entitled to designate one nominee that it desires to have elected to
the board of directors (the "Board") of the Corporation (a "Nominee"). The
Optionee agrees to vote or cause to be voted (at any regular or special
meeting of the shareholders of the Corporation or by written consent in lieu
of any such meeting) all shares of voting stock of the Corporation over which
it has, directly or indirectly through the ownership of the shares or
otherwise, voting power (whether owned as of the date hereof or hereafter
acquired) or over which it has, directly or indirectly through an agreement,
contract, arrangement or otherwise, the right to direct the voting of such
shares (whether such agreement, contract, arrangement or otherwise exists as
of the date hereof or hereafter made) in favor of, or otherwise consent to,
the election of such Nominee to the Board. If any Nominee is unable or
unwilling to serve upon his or her election to the Board, the Optionor shall
be entitled to nominate a replacement who shall then be a Nominee for the
purposes of this Agreement. If, following election to the Board, any Nominee
shall resign or be removed for any reason (with or without cause) or be unable
to serve by reason of death or disability, the Optionor shall within 30 days
of such event, notify the Optionee in writing of a replacement, and the
Optionee shall take such steps as may be necessary to elect such replacement
to the Board to fill the unexpired term of the Nominee.
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9. Entire Agreement. This Agreement, along with the proxy of even
date given by Optionor to Optionee, expresses the entire agreement between the
parties concerning the subject matter hereof and supersedes all previous
agreements, whether written or oral, between the parties respecting the
subject matter hereof.
10. Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective heirs, executors, administrators and
successors and permitted assigns.
11. Notices. Notice under this agreement shall be in writing and
shall be given by facsimile transmission (with copy sent by overnight
courier), or electronically in portable document format (PDF) (with copy sent
via facsimile transmission). Notice shall be deemed given when it is received
by the recipient of the notice. Notices to the parties shall be as follows:
If to Optionee, CHC or CPN:
DED Enterprises, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail address: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
If to Optionor:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Partnership
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
e-mail address: ▇▇▇▇@▇▇▇▇▇.▇▇▇
12. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
13. Litigation. If any legal action is brought for the enforcement of
this Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorney fees, paralegal fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may
be entitled. Any such legal action shall be brought exclusively in courts of
competent jurisdiction in Miami-Dade County, Florida.
14. Indemnification.
(a) The Optionee, CHC, CPN, and their Affiliates (the "Indemnifying
Parties") each agree, jointly or severally, to indemnify and hold the
Optionor, its shareholders, officers, directors, employees agents and
representatives (each an "Indemnified Party") harmless against any and all
losses, claims, damages, expenses, liabilities, or actions in respect thereof
of any nature whatsoever ("Claims"), whenever or wherever brought, directly or
indirectly, to which any Indemnified Party may become subject under the
Securities Act of 1933, the Securities Exchange Act of 1934, the securities
laws of any other jurisdiction, the rules and regulations promulgated
thereunder, or other federal or state statutory laws or regulations, at common
law or otherwise (including payments made in settlement of any litigation),
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insofar as such Claims arise out of or in connection with or are based upon:
(a) any breach by the Optionee of any representation or warranty contained in
this Agreement, (b) the failure of any of the Optionee to observe, perform or
abide by, or any other breach of, any restriction, covenant, obligation or
other provision contained this Agreement, (c) any untrue statement or alleged
untrue statement of any material fact contained in a filing made with the
Securities and Exchange Commission by or on behalf of any of the Indemnifying
Parties or their respective associates or in any filing or document of any
Indemnified Party based upon information furnished to it by the Indemnifying
Parties or associates, or arise out of or are based upon the omission or
alleged omission to state in any of the foregoing a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and (d) any action brought by virtue of or arising from any Indemnified Party
being deemed to be a member of a "group" for purposes of the federal
securities law.
(b) This indemnification will include any and all losses, liabilities,
damages, demands, claims, suits, actions, judgments, costs and expenses,
including, without limitation, interest, penalties, reasonable attorneys'
fees, and any and all reasonable costs and expenses incurred in investigating,
preparing or defending against any litigation, commenced or threatened, any
civil, criminal, administrative or arbitration action, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation asserted against, resulting, imposed upon, or incurred or suffered
by any Indemnified Party (each, a "Loss").
(c) In the event of a claim against any Indemnified Party pursuant to
the prior paragraph or the occurrence of a Loss, such Indemnified Party shall
give the Optionee prompt written notice of such claim or Loss (provided that
failure to promptly notify the Optionee shall not relieve any of the
Indemnifying Parties from any liability which it or they may have on account
of this Agreement, except to the extent that the Optionee shall have been
materially prejudiced by such failure). Upon receipt of such written notice,
the Optionee shall provide the Indemnified Party with counsel to represent it.
Such counsel shall be reasonably acceptable to the Indemnified Party. In
addition, the Indemnified Party will be reimbursed promptly for all Losses
suffered by it as incurred as provided herein. None of the Indemnifying
Parties may enter into any settlement of any Loss or claim without the
Indemnified Party's prior written consent unless such settlement includes a
full release of the Indemnified Party from any and all liability in respect of
such claim.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an
original, but all counterparts shall together constitute one and the same
instrument.
16. Authority. Each party warrants that this Agreement has been duly
authorized, executed and delivered by an authorized officer or representative
of such party and is enforceable in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles.
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17. Definitions.
(a) "Affiliate" means, with respect to any specified Person, any
of the following: any Person beneficially owned or Controlled by, or under
common beneficial ownership or Control with, the specified Person, or any
officer, director, equity owner (of greater than or equal to twenty percent
(20%)), or partner of the specified Person. The purpose of this definition is
to exclude transactions at less than arms' length from triggering, or changing
the substance of, the terms of this Option.
(b) "Control" (including, with correlative meanings, the
terms "Controlling," "Controlling Interest," "Controlled by" and "under common
Control with"), as applied to any Person, shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the beneficial ownership of voting
securities (whether sole or shared) or other ownership interest, by contract
or otherwise.
(c) "Person" means any individual, partnership, firm,
corporation, limited liability company, association, trust, unincorporated
organization or other entity.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first above written.
12345678901234567890123456789012345678901234567890123456789012345678901234567890
The ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Limited Partnership
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------- --------------------------------
Witness ▇▇▇▇ ▇▇▇▇▇▇▇, General Partner
DED Enterprises Inc.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- --------------------------------
Witness ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Carpathian Holding Company, Ltd: Nevis
/s/ ▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------- --------------------------------
Witness ▇▇▇▇▇ ▇▇▇▇▇▇, Director
Carpathian Resources, Ltd: Australia
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------- --------------------------------
Witness ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Director
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