REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of August __, 2001 between Wire
One Technologies, Inc., a Delaware corporation (the "Company"), and the investor
listed on the signature page hereto ("Purchaser"). Capitalized terms used herein
but not otherwise defined shall have the meaning ascribed to them in the
Subscription Agreement (defined below).
W I T N E S S E T H:
WHEREAS, the Company and Purchaser have entered into a Subscription
Agreement, dated as of the date hereof (the "Subscription Agreement"), pursuant
to which Purchaser subscribed to purchase, at the Closing, the number of shares
of Common Stock and Warrants set forth on the signature page to the Subscription
Agreement. As used herein, the term "Purchasers" shall refer to Purchaser
collectively with all other purchasers of shares of Common Stock or Warrants in
connection with the Offering, each of whom has or will execute a Subscription
Agreement. The shares of Common Stock purchased by the Purchasers in the
Offering are referred to collectively as "Common Shares", and the shares of
Common Stock issuable upon exercise of the Warrants issued to the Purchasers are
referred to as "Warrant Shares." The Common Shares and the Warrant Shares are
hereinafter referred to collectively as "Registrable Stock".
NOW, THEREFORE, in consideration of the respective covenants and
conditions of the parties set forth herein and in the Subscription Agreement,
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. Registration of Registrable Stock.
(a) Filing of Registration Statement. The Company shall use its
reasonable best efforts to prepare and file within 30 days after the Closing
Date a registration statement on Form S-3 (the "Registration Statement") with
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Securities Act") covering the offering and sale of the
Registrable Stock by the Purchasers in privately negotiated transactions,
"brokers' transactions" or in transactions directly with a "market maker," as
such terms are defined in paragraphs (f) and (g) of Rule 144 under the
Securities Act ("Brokers' Transactions").
(b) Effectiveness; Amendments. The Company shall use its reasonable
best efforts (including responding to SEC comments within 10 business days after
receipt of such comments) to file and cause to be declared effective within the
earlier of 90 days after the Closing Date or five business days after receiving
a no-review status from the SEC (the "Effective Date") and, except as set forth
below, to remain effective under the Securities Act, the Registration Statement
and will prepare and file with the SEC any amendments or post-effective
amendments as may be necessary to keep the Registration Statement effective
under the Securities Act. The Company will promptly notify the Purchasers in
writing of the date on which the Registration Statement is declared effective.
Notwithstanding the foregoing, (i) the Company shall not be required to keep the
Registration Statement effective for purposes of the sale of Registrable Stock
thereunder at any time after the earlier of (A) the date on which all shares of
Registrable Stock have been sold or are no longer outstanding, and (B) the date
which is two years following the acquisition from the Company of the Registrable
Stock, or such earlier date as of which the Purchasers shall be able to make use
of the safe-harbor provisions of Rule 144(k) under the Securities Act (or any
successor rule) with respect to sales of Registrable Stock.
If the Registration Statement has not been declared effective by the
SEC on or prior to the Effective Date or if after the Effective Date, a Blackout
Event (as defined in (paragraph (e) below)) has occurred and continues for more
than thirty (30) days in the aggregate during any twelve (12) month period (such
event, a "Registration Default"), the Company shall pay liquidated damages
("Liquidated Damages") to each holder of Registrable Securities equal to 1.5% of
the aggregate dollar amount originally invested by such holder as listed on the
signature page to the Subscription Agreement of such holder for each thirty (30)
day period or portion thereof that the Registration Default continues. The
Company shall not be responsible for any Liquidated Damages to any holder other
than the original investors that executed Subscription Agreements. Following the
cure of all Registration Defaults relating to any particular Registrable
Security, the accrual of Liquidated Damages with respect to such Registration
Default will cease.
(c) Copies of Documents. During the period that the Company has agreed
to use its reasonable best efforts to cause the Registration Statement to remain
effective (the "Effectiveness Period"), the Company shall furnish to each
Purchaser such number of copies of the Registration Statement, the prospectus
included therein (the "Prospectus") and any amendments and supplements thereto
and any documents incorporated by reference in the Registration Statement as
such Purchaser shall reasonably request.
(d) Blue Sky Compliance. The Company shall register or qualify or
cooperate with the Purchasers in connection with the notification, coordination,
registration or qualification (or obtain exemption from such registration or
qualification) of the Registrable Stock under such other securities or blue sky
laws of such jurisdictions in the United States as the Purchasers reasonably
shall request and do any and all other acts and things which may be reasonably
necessary to enable the Purchasers to consummate the disposition of the
Registrable Stock by them under the Registration Statement in such jurisdictions
during the Effectiveness Period; provided, however, that in no event shall the
Company be required to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified, to subject itself to taxation in any
jurisdiction where it has not theretofore done so or to take any action which
would subject it to general service of process in any such jurisdiction where it
is not then so subject.
(e) Notification. During the Effectiveness Period, the Company shall
notify the Purchasers promptly, and (if requested by any Purchaser) confirm such
notice in writing, (i) of any request by the SEC or any other regulatory
authority for amendments or supplements to the Registration Statement or the
Prospectus or for additional information relating thereto, (ii) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose, (iii) of the
receipt by the Company of any notification or stop order with respect to the
suspension of the registration, qualification or exemption from registration or
qualification of any of the shares of Registrable Stock covered by the
Registration Statement for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose and (iv) of the happening of any
event which makes any statement made in such Registration Statement or in the
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or which requires the making of any
changes in such Registration Statement or Prospectus so that such documents will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (each, a "Blackout Event").
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(f) Supplements and Post-Effective Amendments. During the Effectiveness
Period, upon the occurrence of any event contemplated by clause (i) or (iv) of
paragraph (e) above, the Company will prepare a supplement or post-effective
amendment to the Registration Statement or a supplement to the Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Stock
being sold thereunder, the Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the Company, in
good faith, may delay the filing of any such amendment or supplement for a
reasonable period of time, but in no event more than 15 consecutive trading
days, in order to permit the Company (i) to effect disclosure or disposition or
consummation of any transaction requiring confidential treatment which is being
actively pursued at such time and which would require disclosure in the
Registration Statement or (ii) to negotiate, effect or complete any transaction
which the Company reasonably believes might be jeopardized, delayed or made more
costly to the Company by disclosure in the Registration Statement
(g) Listing. The Company shall cause the Registrable Stock covered by
the Registration Statement to be listed on each securities exchange or
securities quotation system, if any, on which similar securities issued by the
Company are then listed.
(h) Correspondence with the SEC. The Company shall, upon request from
any Purchaser, deliver promptly to such Purchaser copies of all correspondence
between the SEC and the Company, its counsel or auditors.
(i) Stock Certificates. The Company will cooperate with the Purchasers
to facilitate the timely preparation and delivery of certificates representing
Registrable Stock sold under the Registration Statement.
2. Piggyback Registration. If at any time prior to the second
anniversary of the date hereof the Company proposes to file a registration
statement under the Securities Act with respect to an underwritten offering of
Common Stock (except on Form S-4 or Form S-8 or any successor forms thereto),
for its own account and the Registration Statement contemplated in Section 1(a)
has not been filed or has not been declared effective by the SEC, then the
Company shall give written notice of such proposed filing to the holders of
Registrable Stock as far in advance of the anticipated filing date as is
practicable (the "Piggyback Notice"). The Piggyback Notice shall offer such
holders the opportunity to register such amount of Registrable Stock as each
such holder may request (a "Piggyback Registration"); subject in all events to
the agreement of the underwriter or underwriters of the offering contemplated by
such registration statement that such shares of Registrable Stock can be
included in such registration statement without adversely affecting such
offering. Any reduction in the number of securities to be so offered shall be
(i) first, pro-rata among all security holders who are exercising "piggyback"
registration rights, based on the number of registrable securities originally
proposed to be sold by each of them, and (ii) second, pro-rata among all
security holders who are exercising "demand" registration rights pursuant to a
registration rights agreement with the Company, based on the number of
registrable securities originally proposed to be sold by each of them.
3. Obligations of Purchasers. Following the filing of the Registration
Statement and during any period that the Registration Statement is effective,
each Purchaser shall:
(a) not effect any stabilization transactions or engage in any
stabilization activity in connection with the Company's Common Stock in
contravention of Regulation M under the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
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(b) furnish each broker through whom any Purchaser offers Registrable
Stock such number of copies of the Prospectus as the broker may require and
otherwise comply with prospectus delivery requirements under the Securities Act;
(c) not (and shall not permit any "affiliated purchaser" (as defined in
Rule 100(b)(1) of Regulation M under the Exchange Act) to) bid for or purchase
for any account in which any Purchaser has a beneficial interest, or attempt to
induce any other person to purchase, any Company Common Stock in contravention
of Regulation M under the Exchange Act;
(d) cooperate with the Company as the Company fulfills its obligations
under Section 1(d) hereof;
(e) furnish such information concerning such Purchaser as the Company
may from time to time reasonably request;
(f) sell Registrable Stock only in privately negotiated transactions or
Brokers' Transactions; and
(g) not sell under the Registration Statement during any period after
the Company has provided notice to such Purchaser pursuant to Section 1(e)(iv)
above and until the Company provides to such Purchaser notice that the
Registration Statement no longer fails to state a material fact required to be
stated therein, misstates a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements made not
misleading.
4. Expenses. The Company shall be responsible for the payment of (x)
all registration and filing fees relating to registration of the offering by the
Purchasers of the Registrable Stock, including, without limitation, registration
and filing fees (A) with respect to filings required to be made with the SEC or
the National Association of Securities Dealers and (B) with respect to
registrations and filings made under state securities or blue sky laws and (y)
any expenses incurred by the Company in connection with the preparation of the
Registration Statement and the Prospectus. The Purchasers shall be responsible
for the payment of fees and disbursements of counsel to the Purchasers in
connection with the preparation of the Registration Statement and the Prospectus
and fees paid to brokers in connection with the sale of any of the Registrable
Stock.
5. Indemnification.
(a) Indemnity by the Company. The Company shall (i) indemnify and hold
harmless each Purchaser and each person who controls such Purchaser, within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities ("Losses"), to which each such indemnified party may become
subject, under the Securities Act or otherwise, insofar as such Losses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement or Prospectus, as amended or supplemented if the Company has furnished
any supplements or amendments thereto (if used during the period the Company is
required to keep the Registration Statement and Prospectus current), or any
document filed under a state securities or blue sky law (collectively,
"Registration Documents") or insofar as any Losses (or actions in respect
thereof) arise out of or are based upon the omission or alleged omission to
state in any Registration Document a material fact required to be stated therein
or necessary to make the statements made therein (in the case of a prospectus,
in the light of the circumstances under which they were made), not misleading,
and (ii) reimburse each indemnified party for all legal or other expenses
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reasonably incurred by it in connection with investigating or defending any such
Losses or actions, including any amounts paid in settlement of any litigation,
commenced or threatened, if such settlement is effected with the prior written
consent of the Company; provided, however, that the Company shall not be liable
for any Losses arising out of or based upon any untrue statement or omission
made in any Registration Document in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Purchaser
expressly for use in the preparation of the Registration Document; and provided,
further, that the Company shall not be liable to a particular indemnified party
under the indemnity agreement in this Section 5(a) with respect to the
Prospectus, as amended or supplemented, to the extent that the Loss arises from
the sale of any shares of Registrable Stock by such indemnified party to the
person asserting Loss and to which there was not sent or given, within the time
required by the Securities Act, a copy of the Prospectus as then amended or
supplemented, if the Company has previously furnished copies thereof to such
indemnified party and such Prospectus as then amended or supplemented has
corrected the misstatement or omission at issue.
(b) Indemnity by Purchasers. Each Purchaser shall, (i) indemnify and
hold harmless the Company, any officer, director, employee or agent of the
Company, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act against any Losses to which each
such indemnified party may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Document, or arise out of or are based upon the
omission or alleged omission to state in any Registration Document a material
fact required to be stated therein or necessary to make the statements made
therein (in the case of a prospectus, in the light of the circumstances under
which they were made), not misleading, and (ii) reimburse each indemnified party
for all legal or other expenses reasonably incurred by it in connection with
investigating or defending any such Losses or action, including any amounts paid
in settlement of any litigation, commenced or threatened, if such settlement is
effected with the prior written consent of such Purchaser; provided, however,
that such indemnification or reimbursement shall be payable only if, and to the
extent that, any Losses arise out of or are based upon an untrue statement or
omission made in any Registration Document in reliance upon and in conformity
with written information furnished to the Company by such Purchaser expressly
for use in the preparation thereof.
(c) Procedure for Indemnification. Promptly after receipt by an
indemnified party, under Section 5(a) or 5(b), of notice of the commencement of
any action, the indemnified party shall notify the indemnifying party in writing
of the commencement thereof, if a claim in respect thereof is to be made against
an indemnifying party under any of these Sections; but the omission of such
notice shall not relieve the indemnifying party from liability which it may have
to the indemnified party under this Section 5, except to the extent that the
indemnifying party is actually prejudiced in any material respect by such
failure to give notice, and shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under this
Section 5. In case the event that an action is brought against the indemnified
party and such indemnified party notifies the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and to the extent that it chooses, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party that it so chooses, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided however, that (i) if the indemnifying party fails to take
reasonable steps necessary to defend diligently the claim within 20 days after
receiving notice from the indemnified party that the indemnified party believes
it has failed to do so, or (ii) if the indemnified party who is a defendant in
any action or proceeding which is also brought against the indemnifying party
reasonably shall have concluded that there are legal defenses available to the
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indemnified party which are not available to the indemnifying party, or (iii) if
representation of both parties by the same counsel is otherwise inappropriate
under applicable standards of professional conduct, the indemnified party shall
have the right to assume or continue its own defense as set forth above. In no
event shall the indemnifying party be responsible for more than one firm of
counsel for all indemnified parties.
(d) Non-Exclusive Indemnity. Any indemnity agreements contained herein
shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract and shall
remain operative and in full force and effect regardless of any investigation
made or omitted by or on behalf of any indemnified party.
(e) Contribution. If for any reason the foregoing indemnity is
unavailable, or is insufficient to hold harmless an indemnified party, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in such proportion as is appropriate to
reflect not only the relative fault of the indemnifying party and the
indemnified party, but also the relative benefits received by the indemnifying
party on the one hand (taking into consideration the fact that the provision of
the registration rights hereunder served as an inducement to the Purchasers to
enter into their respective Subscription Agreements) and the indemnified party
on the other, as well as any other relevant equitable considerations. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
6. Miscellaneous.
(a) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York without giving effect to the
choice of law principles thereof.
(b) Entire Agreement; Amendment; Waiver. This Agreement and the
Subscription Agreement: (i) contains the entire agreement among the parties
hereto with respect to the subject matter hereof, (ii) supersedes all prior
written agreements and negotiations and oral understandings, if any, with
respect thereto, and (iii) may not be amended or supplemented except by an
instrument or counterparts thereof in writing signed by the Company and each of
the Purchasers. No waiver of any term or provision of this Agreement shall be
effective unless in writing signed by the party to be charged. The waiver by any
party of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
(c) Binding Effect. This Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns; provided, however, that no party hereto may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of the other parties hereto.
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(d) Notices. All notices, requests, consents and other communications
to any party hereunder shall be in writing and shall be given either by personal
service, certified mail, return receipt requested, overnight courier or
telecopy, addressed as follows:
if to the Company, to:
Wire One Technologies, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇, Esq.
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
if to any Purchaser, to the address set forth on the signature
page of the Subscription Agreement executed by such Purchaser,
or to such other address as any party may hereafter specify to the other parties
hereto by notice sent in accordance with this Section 6(d). Each such notice,
request or other communication shall be effective when delivered at the address
specified in this Section 6(d).
(e) Headings; Execution in Counterparts. The headings and captions
contained herein are for convenience of reference only and shall not control or
affect the meaning or construction of any provision hereof. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original and all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto as of the date first above written.
Wire One Technologies, Inc.
By:____________________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Executive Vice President
Business Affairs and General Counsel
PURCHASER
By:_____________________________________
Name:
Title: