Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 11, 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 Securities Purchase Agreement,
dated as of the date hereof among the Company and each of the Purchasers (the
"Purchase Agreement").
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 Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. 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 Purchaser and any holder of Registrable
Securities to whom the registration rights conferred by this Agreement have been
transferred.
"Registrable Securities" shall mean (i) Common Stock underlying the
Debentures and Warrants held by the Holders or (ii) 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) 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 Securities 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 M Y
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 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 Purchaser's
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
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provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder. Certificates evidencing shares of Common Stock
(including shares underlying the Warrants) shall not contain any legend
(i) while a registration statement covering the resale of such security is
effective under the Securities Act, or (ii) following any sale of such
shares pursuant to Rule 144, or (iii) if such shares are eligible for sale
under Rule 144(k), or (iv) 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). If all or any
portion of a Debenture or Warrant is converted or exercised at a time when
there is an effective registration statement to cover the resale of the
underlying shares, or if such underlying shares of Common Stock may be
sold under Rule 144 or if such legend is not otherwise required under
applicable requirements of the Securities Act (including judicial
interpretations. thereof) then such underlying shares shall be issued free
of all legends. 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 three 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 effect 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 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 will not require
such a legal opinion or "no action" letter (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; provided that each transferee agrees in writing to be subject to
the terms of this Section 4. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear the restrictive legend set
forth in Section 3 above.
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5. Registration.
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(i) At any time before the third anniversary of the date of this
Agreement, whenever the Company proposes to file a registration statement
pursuant to the Securities Act with the SEC, other than a registration relating
to the offering or issuance of shares in connection with (i) employee
compensation or benefit plans or (ii) one or more acquisition transactions under
a Registration Statement on Form S-4 or Form S-l under the Securities Act (or a
successor to Form S-4 or Form S-l), the Company shall give each Holder of
Registrable Securities written notice (the "Company Notice") of the Company's
intention to file a registration statement at least fifteen days prior to the
date the Company proposes to file such registration statement. The Company shall
include in such registration statement the Registrable Securities unless either
(i) the Registrable Securities are included in a registration statement that is
effective under the Securities Act, or (ii) a Holder gives the Company notice
not to include such Holder's Registrable Securities in the registration
statement within ten days of such Holder's receipt of the Company Notice.
(ii) If the Company has not filed, a registration statement covering the
resale of the Registrable Securities within four months from the date hereof,
and the Company shall receive a written request signed by holders holding the
majority of the Registrable Securities for the registration of any of such
shares (the "Demand Notice"), the Company shall given notice to all holders of
such request and give them the opportunity to join such request, and the Company
shall prepare and file with Commission a registration statement under the
Securities Act, covering the shares of Common Stock which are the subject of
such request and shall use its best efforts to cause such registration statement
to become effective under the Securities Act, as soon as practicable and shall
use its best efforts to maintain the registration effective for a period of 24
months (or so long as a Holder is subject to the volume limitations of Rule
144(e) under the Securities Act).
(iii) 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.
(iv) In the event that the Company fails to file the registration
statement pursuant to Section 5(ii) within 30 days after receipt of the Demand
Notice or if such registration statement has not been declared effective within
ninety (90) days following the date of filing, the Company shall pay to each
Purchaser, as liquidated damages and not as a penalty, an amount equal to 2% of
the aggregate purchase price paid by such Purchaser pursuant to the Purchase
Agreement per month for each month (or partial period thereof) of noncompliance.
Notwithstanding the foregoing payments by the Company, each Purchaser may seek
any other remedies available by law. 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 18% 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 any default.
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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 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.
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(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 prospectus, offering
circular or other document 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 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, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein 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
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untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information 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, prospectus, offering circular or other document 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 maybe 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,
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stating the name and address of said transferee or assignee and identifying the
securities with respect to which such 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
ten days, to any comments received from the Commission with respect to a
registration statement or any amendment thereto.
(iii) Notify the Holders and their counsel 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 registrations statement or any
post-effective amendment, when the same has become effective;
(iv) Furnish such number of prospectuses and other documents incident
thereto, including supplements and amendments, as a Holder may reasonably
request; and
(v) 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.
(vi) 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.
(vii) Comply with all applicable rules and regulations of the Commission.
(viii) 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:
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(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.
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(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 pursuant to Section 5(ii)
other than the Registrable Securities. 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) [Intentionally Omitted]
(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 Purchase 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 written consent of all of the
Holders 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 Purchase Agreement.
(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.
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(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.
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The terms and conditions of this Registration Rights Agreement have been
incorporated by reference into the Purchase Agreement. Execution of a Purchase
Agreement by any Purchaser shall be deemed to constitute execution by such
Purchaser of this Registration Rights Agreement as of the even date therewith.
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
WIRELESS FRONTIER INTERNET, INC.
By:
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Name: Xxx Xxxxx
Title: President
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