Exhibit 10.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of _________ 2004, among Wireless Frontier Internet, Inc., a Delaware
corporation (the "Company"), and the purchasers signatory hereto (each such
purchaser is a "Purchaser" and all such purchasers are, collectively, the
"Purchasers").
This Agreement is made pursuant to the Subscription Agreement(s), dated as
of the date hereof among the Company and each of the Purchasers (the
"Subscription Agreement(s)"). The signature of each Purchaser to his, her or its
Subscription Agreement is deemed to be, and is effective as, such Purchasers'
signature hereto.
The Company and the Purchasers hereby agree as follows
1. Certain Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Subscription Agreements shall have the meanings
given such terms in the Subscription Agreements. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
"Holders" shall mean the Purchasers and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement have been
transferred.
"Registrable Securities" shall mean (i) Shares held by the Holders,
(ii) the Warrant Shares, (iii) the Common Stock issuable upon exercise of
warrants held by Casimir Capital L.P. or its assigns or designees, or (iv) any
Common Stock issued as a dividend or other distribution with respect to or in
exchange for or in replacement of the stock referenced in (i), (ii) or (iii)
above.
The terms "register", "registered" and "registration" shall refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in compliance with the registration obligation of the Company,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company.
"Restricted Securities" shall mean the securities of the Company
required to bear or bearing the legend set forth in Section 3 hereof.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and expense allowances applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for any Holder.
2. Restrictions on Transferability. The Securities and any other securities
issued in respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation, or similar event, shall not be
transferred except upon the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. Any transferee of such securities shall take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement.
3. Restrictive Legend. Each certificate representing the Securities, the
shares of Common Stock underlying the Warrants and any other securities issued
in respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted or unless the securities evidenced by such certificate shall
have been registered under the Securities Act) be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY
NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT.
Upon request of Purchaser, the Company shall remove the foregoing legend
from the certificate or issue to such holder a new certificate therefor free of
any transfer legend, if, with such request, the Company shall have received
either an opinion of counsel in form, substance and scope reasonably acceptable
to the Company, or the "no-action" letter referred to in Section 4 to the effect
that any transfer by such holder of the securities evidenced by such certificate
will not violate the Securities Act and applicable state securities laws, unless
any such transfer legend may be removed pursuant to Rule 144 or any successor
rule, in which case no such opinion or "no-action" letter shall be required.
The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement or grant a security interest in
some or all of the Registrable Securities and, if required under the terms of
such arrangement, such Purchaser may transfer pledged or secured Registrable
Securities to the pledgees or secured parties. If required by the Company's
transfer agent in order to effect a pledge, the Company shall cause its counsel,
at no cost to the Purchasers, to issue an opinion of counsel to the Company's
transfer agent. Further, no notice shall be required of such pledge. At the
appropriate Purchasers' expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Registrable
Securities, including the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) of the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder.
2
Certificates evidencing shares of Common Stock (including shares
underlying the Warrants) shall not contain any legend (i) following any sale of
such shares pursuant to a registration statement or Rule 144, (ii) if such
shares are eligible for sale under Rule 144(k), or (iii) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission), as
reasonably determined by the Company and its counsel. The Company agrees that
following the effective date of the registration statement required to be filed
hereunder or at such time as such legend is no longer required, it will, no
later than five trading days following the delivery by a Purchaser to the
Company or the Company's transfer agent of a certificate representing shares of
Common Stock issued with a restrictive legend, deliver or cause to be delivered
to such Purchaser a certificate representing such shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section.
4. Notice of Proposed Transfers. The holder of each certificate representing
Restricted Securities by acceptance thereof agrees to comply in all respects
with the provisions of this Section 4. Prior to any proposed transfer of any
Restricted Securities, the holder thereof shall give written notice to the
Company of such holder's intention to affect such transfer. Each such notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied by either (i) if required, a written
opinion of legal counsel to the holder who shall be reasonably satisfactory to
the Company, addressed to the Company, to the effect that the proposed transfer
of the Restricted Securities may be effected without registration under the
Securities Act in form, substance and scope reasonable acceptable to the Company
or (ii) a "no action" letter from the Commission to the effect that the
distribution of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by such holder to the Company. The Company shall promptly cause its
legal counsel to deliver, at no charge to the Holder, a written opinion of such
legal counsel addressed to the Company's transfer agent (x) in any transaction
in compliance with Rule 144 promulgated under the Securities Act, (y) in any
transaction in which the Purchaser distributes Restricted Securities solely to
its stockholders on a pro rata basis for no consideration or (z) in any
transaction in which a holder which is a partnership or limited liability
company distributes Restricted Securities solely to its partners or members, as
applicable, for no consideration. For the avoidance of doubt, in no event shall
such legal counsel be required to deliver any written opinion as contemplated in
the preceding sentence if such legal counsel reasonably concludes that it cannot
render such opinion. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear the restrictive legend set forth in
Section 3 above.
5. Registration.
(i) The Company shall file a registration statement on Form
SB-2 or other appropriate registration document under the Securities Act for
resale of Common Stock and shall use its reasonable best efforts to maintain the
registration effective until the earliest to occur of (A) the date that is two
years following the closing of the transactions contemplated by the Subscription
Agreements; (B) the date as of which all the Shares and Warrant Shares held by
the
3
Holders may be sold without regard to the volume limitations set forth in Rule
144(e) of the Securities Act; and (C) such date as of which all the Shares and
Warrant Shares held by the Holders have been sold (the "Effectiveness Period").
The Company shall file such registration statement as soon as practicable
following the last closing of the Offering, but in any event no later than
thirty (30) days after the last closing date of the Offering, and shall cause
such registration statement to become effective within the earlier of (i) the
fifth trading day following the date on which the Company is notified by the
Commission that such registration statement will not be reviewed or is no longer
subject to further review and comments, (ii) one hundred twenty (120) days after
the date of such final closing of the Offering or (iii) ninety (90) days from
the date of the filing of such registration statement.
(ii) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 5 in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act.
(iii) In the event that the Company fails to file the
registration statement pursuant to this Section 5 within thirty (30) days after
the last closing date or if such registration statement has not been declared
effective within the earlier of (i) the fifth trading day following the date on
which the Company is notified by the Commission that such registration statement
will not be reviewed or is no longer subject to further review and comments,
(ii) ninety (90) days after the date of the filing of such registration
statement or (iii) one hundred twenty days (120) after the date of the final
closing of the Offering (such failure to file or become effective, an "Event"),
the Company shall pay to each such Holder upon the occurrence of each such Event
and (y) on each monthly anniversary of the date of each such Event (if the
applicable Event shall not have been cured by such date) until the applicable
Event is cured, an amount in cash, as liquidated damages and not as a penalty,
equal to 2% of the aggregate purchase price paid by such Holder pursuant to its
Subscription Agreement. If the Company fails to pay any liquidated damages
pursuant to this Section in full within seven days after the date payable, the
Company will pay interest thereon at a rate of 10% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full. The liquidated damages
pursuant to the terms hereof shall apply on a pro-rata basis for any portion of
a month prior to the cure of an Event.
(iv) If during the Effectiveness Period, the number of
Registrable Securities at any time exceeds 100% of the number of shares of
Common Stock then registered in a registration statement required hereunder,
then the Company shall file as soon as reasonably practicable but in any case
prior to the 30th day following the date such number is exceeded, an additional
registration statement covering the resale by the Holders of not less than all
of such Registrable Securities and the Company shall use commercially reasonable
efforts to cause such registration statement to be declared effective as soon as
reasonably practicable thereafter.
6. Expenses of Registration. The Company shall bear all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Agreement and all underwriting discounts, selling commissions
and expense allowances applicable to the sale of any
4
securities by the Company for its own account in any registration. All Selling
Expenses shall be borne by the Holders whose securities are included in such
registration pro rata on the basis of the number of their Registrable Securities
so registered.
7. Indemnification.
(i) The Company will indemnify each Holder, each of its
officers, directors, agents, employees and partners, and each person controlling
such Holder, with respect to each registration, qualification or compliance
effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter, and their respective counsel against all
claims, losses, damages and liabilities (or actions, proceedings or settlements
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement or
prospectus prepared by the Company (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading, or any violation by the Company of the Securities Act or any
rule or regulation thereunder applicable to the Company and relating to action
or inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers, directors, agents, employees and partners, and each person controlling
such Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses as they are reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises primarily and directly out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omissions) based upon written
information furnished to the Company by such Holder or underwriter and stated to
be specifically for use therein.
(ii) Each Holder whose Registrable Securities are included in
any registration, qualification or compliance effected pursuant to this
Agreement will indemnify the Company, each of its directors and officers and
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of the Securities Act and the rules and regulations
thereunder, each other such Holder and each of their officers, directors and
partners, and each person controlling such Holder, and their respective counsel
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising primarily and directly out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, and will reimburse the Company and such Holders, directors,
officers, partners, persons, underwriters or control persons for any legal or
any other expenses as they are reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement or prospectus in reliance upon and in conformity with
written information
5
furnished to the Company by such Holder and stated to be specifically for use
therein; provided, however, that the obligations of such Holders hereunder shall
be limited to an amount equal to the net proceeds to each such Holder sold under
such registration statement or prospectus as contemplated herein.
(iii) Each party entitled to indemnification under this
Section 7 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense; and provided further
that if any Indemnified Party reasonably concludes that there may be one or more
legal defenses available to it that are not available to the Indemnifying Party,
or that such claim or litigation involves or could have an effect on matters
beyond the scope of this Agreement, then the Indemnified Party may retain its
own counsel at the expense of the Indemnifying Party; and provided further that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement unless
and only to the extent that such failure to give notice results in material
prejudice to the Indemnifying Party. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 7 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
8. Transfer or Assignment of Rights. The benefits to the Holder hereunder may
be transferred or assigned by a Holder to a transferee or assignee of any of the
Restricted Securities, provided that the Company is given written notice prior
to the time that such right is exercised, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
6
registration rights are being transferred or assigned; provided further that the
transferee or assignee of such rights assumes in writing the obligations of the
Holder under this Agreement.
9. Registration Procedures. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will keep each Holder who is
entitled to registration benefits hereunder advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, the Company will:
(i) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of securities
covered by such registration statement;
(ii) Respond as promptly as reasonably possible, and in any event
within twenty days, to any comments received from the Commission with respect to
a registration statement or any amendment thereto.
(iv) Notify the Holders as promptly as reasonably possible and (if
requested by any such person) confirm such notice in writing no later than one
trading day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a registration statement is proposed
to be filed and (B) with respect to a registration statement or any
post-effective amendment, when the same has become effective;
(v) Furnish such number of prospectuses and other documents incident
thereto, including supplements and amendments, as a Holder may reasonably
request; and
(vi) Furnish to each selling Holder, upon request, a copy of all
documents filed with and all correspondence from or to the Commission in
connection with any such registration statement other than nonsubstantive cover
letters and the like.
(vii) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of a
registration statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(viii) Comply with all applicable rules and regulations of the
Commission.
(ix) The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if requested by the Commission, the
controlling person thereof.
10. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to:
7
(i) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act; and
(ii) Use its reasonable best efforts to file with the Commission in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act.
11. Reporting under the Exchange Act. The Company agrees to take no action
designed to, or with the effect of, causing the Company to cease to be subject
to the reporting requirements of the Exchange Act for so long as a registration
statement under this Agreement is required to be filed or caused to be
effective, or shall be required to be or remain effective.
12. Miscellaneous.
(i) Neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of the Company
in the registration statement required to be filed hereunder other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing to any of its security holders any registration
rights having priority over the registration rights granted to the Holders
hereunder. The Company shall not file any other registration statement until the
initial registration statement required hereunder is declared effective by the
Commission.
(ii) Compliance. Each Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to the registration
statement required hereunder.
(iii) Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective registration statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities (other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act), or their then- equivalents, relating to equity securities to be
issued solely in connection with any acquisition of any entity or business, or
equity securities issuable in connection with stock option or other employee
benefit plans), then the Company shall send to each Holder written notice of
such determination and, if within fifteen days after receipt of such notice, any
such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided, that, the Company shall not be
required to register any Registrable Securities pursuant to this Section that
are eligible for resale pursuant to Rule 144(k) promulgated under the Securities
Act.
(iv) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Subscription Agreement(s).
(v) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior
8
written consent of the Holders of at least sixty-six and two-thirds percent
(66-2/3%) of the then-outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the persons as permitted
under the Subscription Agreement(s).
(vi) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(vii) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
(viii) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(ix) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(x) Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
********************
9
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
WIRELESS FRONTIER INTERNET, INC.
By: ____________________________________
Name:
Title:
[REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE]
10
