-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GORvqzMTOdPU0XFjUn+p+8v5S7UWAVKqDBvZ+EGTRi7vAXIxDqaWdH4Rb4/050rn u4LqbXfGl/7GJD53+Py7lA== /in/edgar/work/20000627/0000889812-00-002914/0000889812-00-002914.txt : 20000920 0000889812-00-002914.hdr.sgml : 20000920 ACCESSION NUMBER: 0000889812-00-002914 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000614 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WIRE ONE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000746210 STANDARD INDUSTRIAL CLASSIFICATION: [5065 ] IRS NUMBER: 770312442 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-25940 FILM NUMBER: 661405 BUSINESS ADDRESS: STREET 1: 225 LONG AVENUE CITY: HILLSIDE STATE: NJ ZIP: 07205 MAIL ADDRESS: STREET 1: 225 LONG AVENUE CITY: HILLSIDE STATE: NJ ZIP: 07205 FORMER COMPANY: FORMER CONFORMED NAME: VIEW TECH INC DATE OF NAME CHANGE: 19950418 8-K 1 0001.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): June 14, 2000 WIRE ONE TECHNOLOGIES, INC. --------------------------- (Exact name of Registrant as Specified in its Charter) Delaware 0-25940 77-0312442 ---------- --------- ----------- (State or Other Jurisdiction (Commission File No.) (IRS Employer of Incorporation) Identification No.) 225 Long Avenue, Hillside, NJ 07205 ----------------------------- ------- (Address of Principal Executive Offices) (Zip Code) (973) 282-2000 ---------------- (Registrant's Telephone Number, Including Area Code) INFORMATION TO BE INCLUDED IN REPORT Item 5. Other Events. On June 14, 2000, Wire One Technologies, Inc. (the "Company"), issued 2,450 shares of its Series A Convertible Preferred Stock and Warrants to purchase 857,500 shares of its Common Stock in a private placement to institutional and strategic investors. The Company estimates the net proceeds of the offering, after expenses, to be approximately $16,150,000. The Series A Convertible Preferred Stock is subject to the terms and conditions of the Certificate of Designations, Preferences and Rights attached hereto as Exhibit 3.1. The Warrants are subject to the terms and conditions of the form of Warrant attached hereto as Exhibit 4.3. Pursuant to a Registration Rights Agreement attached as Exhibit 4.2, the Company has agreed to prepare and file with the Securities and Exchange Commission a registration statement covering the resale of the shares of the Company's Common Stock issuable pursuant to the terms of the Series A Convertible Preferred Stock and the Warrants. The terms of the private placement are more fully set forth in the Preferred Stock and Warrant Purchase Agreement attached hereto as Exhibit 10.1. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Businesses Acquired. Not applicable. (b) Pro Forma financial Information. Not applicable. (c) Exhibits. Exhibit No. Description ----------- ----------- 3.1 Certificate of Designations, Preferences and Rights of Series A Preferred Stock of Wire One Technologies, Inc. filed with the Delaware Secretary of State on June 14, 2000. 4.1 Reference is made to Exhibit 3.1. 4.2 Registration Rights Agreement dated as of June 14, 2000 among Wire One Technologies, Inc. and the Investors set forth therein. 4.3 Form of Warrant. 10.1 Preferred Stock and Warrant Purchase Agreement dated as of June 14, 2000 among Wire One Technologies, Inc. and the Buyers set forth therein. 99.1 Text of Press Release dated June 16, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WIRE ONE TECHNOLOGIES, INC. By /S/ Richard Reiss --------------------------------------------- Richard Reiss President and Chief Executive Officer Date: June 27, 2000 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 3.1 Certificate of Designations, Preferences and Rights of Series A Preferred Stock of Wire One Technologies, Inc. filed with the Delaware Secretary of State on June 14, 2000. 4.1 Reference is made to Exhibit 3.1. 4.2 Registration Rights Agreement dated as of June 14, 2000 among Wire One Technologies, Inc. and the investors set forth therein. 4.3 Form of Warrant. 10.1 Preferred Stock and Warrant Purchase Agreement dated as of June 14, 2000 among Wire One Technologies, Inc. and the Buyers set forth therein. 99.1 Text of Press Release dated June 16, 2000. EX-3.1 2 0002.txt CERTIFICATE OF DESIGNATIONS PREFERENCES CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A PREFERRED STOCK OF WIRE ONE TECHNOLOGIES, INC. WIRE ONE TECHNOLOGIES, INC. (the "Company"), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that, pursuant to authority contained in Article FOURTH of its Certificate of Incorporation, and pursuant to Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Company at a meeting duly held, adopted resolutions providing for the designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of two thousand two hundred (2,500) shares of Series A Preferred Stock of the Company, as follows: RESOLVED, that the Company is authorized to issue 2,500 shares of Series A Preferred Stock (the "Preferred Shares"), par value $.0001 per share, which shall have the following powers, designations, preferences and other special rights: 1. Conversion of Preferred Shares. Preferred Shares shall be convertible into shares of Common Stock on the terms and conditions set forth in this Section 1. (a) Certain Defined Terms. For purposes of this Certificate of Designations, the following terms shall have the following meanings: (i) "Alternative Conversion Price" means, on any Conversion Date, the higher of (i) seventy percent (70%) of the Conversion Price then in effect or (ii) the Market Price, subject to adjustment as provided herein. (ii) "Closing Sale Price" means, for any security as of any date, the last closing trade price for such security at 4:00 p.m. Eastern Standard Time on the Nasdaq National Market as reported by Bloomberg, or, if the Nasdaq National Market is not the principal securities exchange or trading market for such security, the last closing trade price of such security at 4:00 p.m. Eastern Standard Time on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing trade price of such security at 4:00 p.m. Eastern Standard Time in the over-the-counter market on the electronic 1 bulletin board for such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid and ask prices of such security as reported by Bloomberg, or, if no bid or ask prices are reported for such security by Bloomberg, the average of the bid and ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Sale Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Company. (iii) "Conversion Price" means, as of any Conversion Date (as defined below) or other date of determination, $7.00 per share, subject to adjustment as provided herein. (iv) "Issuance Date" means, with respect to each Preferred Share, the date of issuance of the applicable Preferred Share. (v) "Mandatory Conversion Date" means the date which is the earlier of (i) the consummation of the company's sale of its Common Stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act of 1933, as amended, the public offering price of which is not less than $12.00 per share (adjusted for any stock splits, stock dividends, combinations, recapitalizations or the like after the date hereof) and the aggregate gross proceeds to the Company is not less than $40,000,000 or (ii) the conclusion of a 20 consecutive trading day period where the Closing Sale Price of the Company's Common Stock equals or exceeds $12.50. (vi) "Market Price" means, with respect to any security for any period, that price which shall be computed as the arithmetic average of the Closing Sale Prices for such security during the 20 consecutive trading days immediately preceding such date of determination. (All such determinations to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). (vii) "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (viii) "Stated Value" means $7,000 per share. (b) Holder's Conversion Right; Mandatory Conversion. Subject to the provisions of Section 1(d) below, at any time or times on or after June __, 2000, any holder of Preferred Shares shall be entitled to convert any whole number of Preferred Shares into fully paid and nonassessable shares of Common Stock in accordance with Section 1(e), at the Conversion Rate (as defined below). If any Preferred Shares remain outstanding on the Mandatory Conversion Date, then all such Preferred Shares shall, automatically without any action on the part of the Company or the holders of the Preferred Shares, be converted at the Conversion Rate as of such date in accordance with Section 1(e). The Company shall not issue any fraction of a share of Common Stock upon any conversion. All shares of Common Stock (including fractions thereof) 2 issuable upon conversion of more than one Preferred Share by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock. If, after the aforementioned aggregation, the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up or down to the nearest whole share. (c) Conversion Rate. The number of shares of Common Stock issuable upon conversion of each Preferred Share pursuant to Section 1(b) shall be determined by dividing the Stated Value by the Conversion Price (the "Conversion Rate"). (d) Limitations on Conversion. (i) The Company shall not effect any conversion of Preferred Shares and no holder of Preferred Shares shall have the right to convert any Preferred Shares pursuant to Section 1(b) to the extent that after giving effect to such conversion such Person (together with such Person's affiliates) (A) would beneficially own in excess of 4.99% of the outstanding shares of the Common Stock following such conversion and (B) would have acquired, through conversion of Preferred Shares or otherwise, in excess of 4.99% of the outstanding shares of the Common Stock following such conversion during the 60-day period ending on and including such Conversion Date (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by a Person and its affiliates or acquired by a Person and its affiliates, as the case may be, shall include the number of shares of Common Stock issuable upon conversion of the Preferred Shares with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) conversion of the remaining, unconverted Preferred Shares beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this Section 1(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. Notwithstanding anything to the contrary contained herein, each Conversion Notice (as defined below) shall constitute a representation by the holder submitting such Conversion Notice that, after giving effect to such Conversion Notice, (A) the holder will not beneficially own (as determined in accordance with this Section 1(d)(i)) and (B) during the 60-day period ending on and including such Conversion Date, the holder will not have acquired, through conversion of Preferred Shares or otherwise, a number of shares of Common Stock in excess of 4.99% of the outstanding shares of Common Stock as reflected in the Company's most recent Form 10-Q or Form 10-K, as the case may be, or more recent public press release or other public notice by the Company setting forth the number of shares of Common Stock outstanding, but after giving effect to conversions of Preferred Shares by such holder since the date as of which such number of outstanding shares of Common Stock was reported. (ii) The Company shall not effect any mandatory conversion of Preferred Shares unless and until the registration statement (the "Registration 3 Statement") covering the resale of the shares of Common Stock issuable upon conversion of the Preferred Shares required to be filed by the Company pursuant to the Registration Rights Agreement between the Company and the original purchasers of the Preferred Shares (the "Registration Rights Agreement") is declared effective by the Securities and Exchange Commission (the "SEC"). (e) Mechanics of Conversion. The conversion of Preferred Shares shall be conducted in the following manner: (i) Holder's Delivery Requirements. To convert Preferred Shares into shares of Common Stock on any date (the "Conversion Date"), the holder thereof shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., Eastern Standard Time on such date, a copy of a fully executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the Company's designated transfer agent (the "Transfer Agent") with a copy thereof to the Company and (B) surrender to a common carrier for delivery to the Transfer Agent as soon as practicable following such date the original certificates representing the Preferred Shares being converted (or an indemnification undertaking with respect to such shares in the case of their loss, theft or destruction) (the "Preferred Stock Certificates"). (ii) Company's Response. Upon receipt by the Company of a copy of a Conversion Notice, the Company shall promptly send, via facsimile, a confirmation of receipt of such Conversion Notice to such holder and the Transfer Agent, which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein. Upon receipt by the Transfer Agent of the Preferred Stock Certificates to be converted pursuant to a Conversion Notice, the Transfer Agent shall, no later than the second business day following the date of receipt (or the third business day following the date of receipt if received after 11:00 a.m. local time of the Transfer Agent), (A) issue and surrender to a common carrier for overnight delivery to the address as specified in the Conversion Notice, a certificate, registered in the name of the holder or its designee, for the number of shares of Common Stock to which the holder shall be entitled, or (B) provided the Transfer Agent is participating in The Depository Trust Company ("DTC") Fast Automated Securities Transfer Program, upon the request of the holder, credit such aggregate number of shares of Common Stock to which the holder shall be entitled to the holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system. If the number of Preferred Shares represented by the Preferred Stock Certificate(s) submitted for conversion is greater than the number of Preferred Shares being converted, then the Transfer Agent shall, as soon as practicable and in no event later than three business days after receipt of the Preferred Stock Certificate(s) and at the Company's expense, issue and deliver to the holder a new Preferred Stock Certificate representing the number of Preferred Shares not converted. (iii) Dispute Resolution. In the case of a dispute as to the determination of the Market Price or the arithmetic calculation of the Conversion Rate, the Company shall instruct the Transfer Agent to issue to the holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or 4 arithmetic calculations to the holder via facsimile within two (2) business days of receipt of such holder's Conversion Notice. If such holder and the Company are unable to agree upon the determination of the Market Price or arithmetic calculation of the Conversion Rate within two (2) business days of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall within two (2) business days submit via facsimile (A) the disputed determination of the Market Price to an independent, reputable investment bank selected by the Company or (B) the disputed arithmetic calculation of the Conversion Rate to the Company's independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the holder of the results no later than five (5) business days from the time it receives the disputed determinations or calculations. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent manifest error. (iv) Record Holder. The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of Preferred Shares shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date. (v) Pro Rata Conversion and Redemption. In the event the Company receives a Conversion Notice from more than one holder of Preferred Shares for the same Conversion Date and the Company can convert some, but not all, of such Preferred Shares, the Company shall convert from each holder of Preferred Shares electing to have Preferred Shares converted at such time a pro rata amount of such holder's Preferred Shares submitted for conversion based on the number of Preferred Shares submitted for conversion on such date by such holder relative to the total number of Preferred Shares submitted for conversion on such date. (vi) Mechanics of Mandatory Conversion. On the Mandatory Conversion Date, all holders of Preferred Shares shall surrender all Preferred Stock Certificates, duly endorsed for cancellation, to the Transfer Agent and all outstanding Preferred Shares shall be converted as of such date as if the holders of such Preferred Shares had given the Conversion Notice for all such shares on the Mandatory Conversion Date; provided that the Mandatory Conversion Date shall be extended for any Preferred Shares for as long as the conversion of such Preferred Shares would violate the provisions of Section 1(d). (f) Taxes. The Company shall pay any and all taxes that may be payable with respect to the issuance and delivery of Common Stock upon the conversion of Preferred Shares. (g) Adjustments to Conversion Price. The Conversion Price will be subject to adjustment from time to time as provided in this Section 1(g). (i) Adjustment of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Issuance Date of the Preferred Shares, the Company issues or sells, or in accordance with this Section 1(g) is deemed to have issued or sold, 5 any shares of Common Stock, (excluding shares of Common Stock deemed to have been issued by the Company in connection with an Approved Stock Plan (as defined below) or upon conversion of the Preferred Shares) for a consideration per share less than the Conversion Price in effect immediately prior to such time, then immediately after such issue or sale, the Conversion Price then in effect shall be reduced to an amount equal to the product of (x) the Conversion Price in effect immediately prior to such issuance or sale and (y) the quotient of (1) the sum of (I) the product of the Conversion Price and the number of shares of Common Stock Deemed Outstanding (as defined below) immediately prior to such issuance or sale and (II) the consideration, if any, received by the Company upon such issuance or sale, divided by (2) the product of (I) the Conversion Price multiplied by (II) the number of shares of Common Stock Deemed Outstanding immediately after such issue or sale. For purposes of determining the adjusted Conversion Price under this Section 1(g)(i), the following shall be applicable: (A) Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Option is less than the Conversion Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 1(g)(i)(A), the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Upon the expiration or termination of any unexercised Option, such Conversion Price shall be readjusted to such amount as would have obtained had the adjustment made upon the granting or issuance of such Option been made based upon the issuance of only the number of shares of Common Stock actually issued on exercise of such Option. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 1(g)(i)(A) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price which varies with the market price of the Common Stock. (B) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange thereof is less than the Conversion Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the 6 Company at the time of the issuance of sale of such Convertible Securities for such price per share. For the purposes of this Section 1(g) (i) (B), the "price per share for which one share of Common Stock is issuable upon such conversion or exchange" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section 1(g)(i), no further adjustment of the Conversion Price shall be made by reason of such issue or sale. Upon the expiration of any rights of conversion or exchange under such Convertible Securities, such Conversion Price shall be readjusted to such amount as would have obtained had the adjustment made upon the granting or issuance of such Convertible Securities been made based upon the issuance of only the number of shares of Common Stock actually issued on conversion of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 1(g)(i)(B) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price which varies with the market price of the Common Stock. (C) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 1(g)(i)(C), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of the Preferred Shares are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. (D) Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (1) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (2) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration 7 of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (E) Certain Definitions. For purposes of this Section 1(g)(i), the following terms have the respective meanings set forth below: (I) "Approved Stock Plan" shall mean any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director, consultant or other service provider for services provided to the Company. (II) "Common Stock Deemed Outstanding" means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Sections 1(g)(i)(A) and 1(g)(i)(B) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock owned or held by or for the account of the Company or issuable upon conversion of the Preferred Shares. (III) "Options" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. (IV) "Convertible Securities" means any stock or securities (other than Options) directly or indirectly convertible into or exchangeable for Common Stock. (ii) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. If, at any time or from time to time, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or any Convertible Securities, then, following the record date fixed for the determination of holders of Common Stock entitled to receive such stock dividend, a provision shall be made so that the holder of the Preferred Shares shall receive upon exercise thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Company that it would have received if (A) the Preferred Shares had been converted into Common Stock on the date of such event and (B) it had thereafter retained such securities and all rights and distributions relating to them. (iii) Adjustment of Conversion Price Upon Major Corporate Event Announcement. In the event (A) the Company makes a public announcement that it intends to consolidate or merge with or into another Person or engage in a business 8 combination involving the issuance or exchange of more than thirty percent (30%) of the Company's outstanding Common Stock, (B) the Company makes a public announcement that it intends to sell or transfer all or substantially all of the Company's assets, or (C) any Person (including the Company) publicly announces a purchase, tender or exchange offer for more than thirty percent (30%) of the Company's outstanding Common Stock (the transactions described in clauses (A), (B) and (C) above are hereinafter referred to as "Major Corporate Events" and the date of the announcement referred to in clause (A), (B) or (C) is hereinafter referred to as the "Announcement Date"), then the Conversion Price shall, effective upon the Announcement Date and continuing through and including the Adjusted Conversion Price Termination Date (as defined below), be equal to the Conversion Price which would have been applicable for a conversion by the holder on the Announcement Date. From and after the Adjusted Conversion Price Termination Date, the Conversion Price shall be determined as set forth in Section 1(c). For purposes hereof, "Adjusted Conversion Price Termination Date" shall mean, with respect to any proposed Major Corporate Event for which a public announcement as contemplated by this Section 1(g)(iii) has been made, the date upon which the Company or other Person (in the case of clause (C) above) consummates or publicly announces the termination or abandonment of the proposed Major Corporate Event which was the subject of the previous public announcement. (iv) Holder's Right of Alternative Conversion Price. From and after June __, 2001, a holder of Preferred Shares shall have the right, but not the obligation, in its sole discretion to substitute the Alternative Conversion Price for the Conversion Price upon conversion of any Preferred Shares by designating in the Conversion Notice delivered upon conversion of such Preferred Shares that solely for purposes of such conversion the holder is relying on the Alternative Conversion Price rather than the Conversion Price then in effect. A holder's election to rely on an Alternative Conversion Price for a particular conversion of Preferred Shares shall not obligate the holder to rely on an Alternative Conversion Price for any future conversions of Preferred Shares. (v) Other Events. If any event occurs of the type contemplated by the provisions of this Section 1(g)(v) but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the holders of the Preferred Shares; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 1(g)(v). (vi) Notices. (A) Promptly upon any adjustment of the Conversion Price, the Company will give written notice thereof to each holder of Preferred Shares, setting forth in reasonable detail, and certifying, the calculation of such adjustment. (B) The Company will give written notice to each holder of Preferred Shares at least twenty (20) days prior to the date on which the Company 9 closes its books or takes a record (I) with respect to any dividend or distribution upon the Common Stock, (II) with respect to any pro rata subscription offer to holders of Common Stock or (III) for determining rights to vote with respect to any Organic Change, dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder. (C) The Company will also give written notice to each holder of Preferred Shares at least twenty (20) days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder. 2. Other Rights of Holders. (a) Reorganization. Reclassification, Consolidation. Merger or Sale. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person or other transaction which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as "Organic Change" Prior to the consummation of any (i) sale of all or substantially all of the Company's assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the "Acquiring Entity") a written agreement (in form and substance satisfactory to the holders of a majority of the Preferred Shares then outstanding) to deliver to each holder of Preferred Shares in exchange for such shares, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and substance to the Preferred Shares, including, without limitation, having a stated value and liquidation preference equal to the Stated Value and the Liquidation Preference of the Preferred Shares held by such holder, and otherwise satisfactory to the holders of a majority of the Preferred Shares then outstanding. Prior to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance satisfactory to the holders of a majority of the Preferred Shares then outstanding) to insure that each of the holders of the Preferred Shares will thereafter have the right to acquire and receive in lieu of or in addition to (as the case may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of such holder's Preferred Shares such shares of stock, securities or assets that would have been issued or payable in such Organic Change with respect to or in exchange for the number of shares of Common Stock which would have been acquirable and receivable upon the conversion of such holder's Preferred Shares as of the date of such Organic Change (without taking into account any limitations or restrictions on the convertibility of the Preferred Shares). (b) Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the holders of Preferred Shares will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such 10 holder had held the number of shares of Common Stock acquirable upon complete conversion of the Preferred Shares (without taking into account any limitations or restrictions on the convertibility of the Preferred Shares) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. 3. Redemption at Option of Holders. (a) Redemption Option Upon Triggering Event or Major Transaction. In addition to all other rights of the holders of Preferred Shares contained herein, after a Triggering Event or upon consummation of a Major Transaction (each, as defined below), each holder of Preferred Shares shall have the right, at such holder's option, to require the Company to redeem all or a portion of such holder's Preferred Shares at a price per Preferred Share equal to one hundred and ten percent (110%) of the Stated Value ("Redemption Price"). (b) "Triggering Event". A "Triggering Event" shall be deemed to have occurred at such time as any of the following events: (i) the Registration Statement is not declared effective by the SEC on or before one hundred eighty (180) days after the Issuance Date; (ii) while the Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement, the effectiveness of the Registration Statement lapses for any reason (including, without limitation, the issuance of a stop order) or is unavailable to the holder of the Preferred Shares for sale of all of the Registrable Securities (as defined in the Registration Rights Agreement) in accordance with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of ten (10) consecutive trading days or for more than an aggregate of thirty (30) trading days in any 365-day period, provided that the cause of such lapse or unavailability is not due to factors solely within the control of such holder of Preferred Shares; (iii) the suspension from trading or failure of the Common Stock to be listed on the Nasdaq National Market, The New York Stock Exchange, Inc. or The American Stock Exchange, Inc. for a period of five (5) consecutive trading days (excluding disruptions from business announcements that result in any halt(s) in trading of not more than three (3) days on each occasion) and other than as a result of the suspension of trading in securities on such market in general; (iv) the Company's or the Transfer Agent's notice to any holder of Preferred Shares, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of any Preferred Shares into shares of Common Stock that is properly tendered in accordance with the provisions of this Certificate of Designations, or the failure of the Transfer Agent to comply with a Conversion Notice properly tendered in accordance with the provisions of this Certificate 11 of Designations within 10 business days after the receipt by the Transfer Agent of the Conversion Notice; (v) upon the Company's receipt of a Conversion Notice, the Company shall not be obligated to issue the Conversion Shares due to the provisions of Section 9; (vi) the Company breaches any representation, warranty, covenant or other term or condition of the Securities Purchase Agreement between the Company and the initial holders of the Preferred Shares (the "Securities Purchase Agreement"), the Registration Rights Agreement, this Certificate of Designations or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated thereby and hereby, except to the extent that such breach would not have a Material Adverse Effect (as defined in Section 3(a) of the Securities Purchase Agreement) and except, in the case of a breach of a covenant which is curable, only if such breach continues for a period of at least 10 days; or (vii) any of the Preferred Shares have not been converted into Common Stock of June __, 2003. (c) "Major Transaction." A "Major Transaction" shall be deemed to have occurred at such time as any of the following events: (i) the consolidation, merger or other business combination of the Company with or into another Person (other than pursuant to a migratory merger effected solely for the purpose of exchanging the jurisdiction of incorporation of the Company) involving the issuance, exchange or sale of more than thirty (30%) of the shares of Common Stock then outstanding; (ii) the sale or transfer of more than 50% of the Company's assets; or (iii) a purchase, tender or exchange offer made to the holders of more than thirty percent (30%) of the outstanding shares of Common Stock. (d) Mechanics of Redemption at Option of Buyer Upon Triggering Event. Within three (3) business days after the occurrence of a Triggering Event, the Company shall deliver written notice thereof via facsimile and/or overnight courier ("Notice of Triggering Event") to each holder of Preferred Shares. At any time after the earlier of a holder's receipt of a Notice of Triggering Event and such holder becoming aware of a Triggering Event, any holder of Preferred Shares then outstanding may require the Company to redeem all of the Preferred Shares by delivering written notice thereof via facsimile and overnight courier ("Notice of Redemption at Option of Buyer Upon Triggering Event") to the Company, which Notice of Redemption at Option of Buyer Upon Triggering Event shall indicate (i) the number of Preferred Shares that such holder is electing to redeem and (ii) the Redemption Price. (e) Mechanics of Redemption at Option of Buyer Upon Major Transaction. No sooner than 15 days nor later than 10 days prior to the consummation of a Major Transaction, the Company shall deliver written notice thereof via facsimile and overnight courier ("Notice of Major Transaction") to each holder of Preferred Shares, which notice shall include a detailed 12 description of the Major Transaction and the date by which a holder receiving a Notice of Major Transaction must provide the Company with notice of its intent to exercise its redemption rights hereunder (which date shall not be sooner than five business days after the date of the Notice of Major Transaction (the "Major Transaction Response Date")). The Company shall publicly disclose the material facts of such Major Transaction prior to or concurrently with providing the Notice of Major Transaction, such public disclosure to be made not later than 10 days prior to the consummation of such Major Transaction. At any time after receipt of a Notice of Major Transaction and prior to the Major Transaction Response Date (or, in the event a Notice of Major Transaction is not delivered at least 10 days prior to a Major Transaction, at any time prior to the consummation of a Major Transaction) any holder of Preferred Shares then outstanding may require the Company to redeem all of the holder's Preferred Shares then outstanding by delivering written notice thereof via facsimile and overnight courier ("Notice of Redemption at Option of Buyer Upon Major Transaction") to the Company, which Notice of Redemption at Option of Buyer Upon Major Transaction shall indicate (i) the number of Preferred Shares that such holder is electing to redeem and (ii) the Redemption Price. (f) Payment of Redemption Price. Upon the Company's receipt of a Notice(s) of Redemption at Option of Buyer Upon Major Transaction or a Notice(s) of Redemption at Option of Buyer Upon Triggering Event, as the case may be, from any holder of Preferred Shares, the Company shall immediately notify each holder of Preferred Shares by facsimile of the Company's receipt of such notices and each holder which has sent such a notice shall promptly submit to the Transfer Agent such holder's Preferred Stock Certificates which such holder has elected to have redeemed. The Company shall deliver the applicable Redemption Price to such holder within five (5) business days after the Company's receipt of a Notice of Redemption at Option of Buyer Upon Triggering Event or Notice of Redemption at Option of Buyer Upon Major Transaction; provided that a holder's Preferred Stock Certificates shall have been so delivered to the Transfer Agent. If the Company is unable to redeem all of the Preferred Shares submitted for redemption, the Company shall redeem a pro rata amount from each holder of Preferred Shares based on the number of Preferred Shares submitted for redemption by such holder relative to the total number of Preferred Shares submitted for redemption by all holders of Preferred Shares. (g) Disputes; Miscellaneous. In the event of a dispute as to the determination of the Closing Sale Price or the arithmetic calculation of the Redemption Price, such dispute shall be resolved pursuant to Section 1(e)(iii) above with the term "Closing Sale Price", as the case may be, being substituted for the term "Market Price" and the term "Redemption Price" being substituted for the term "Conversion Rate". In the event of a redemption pursuant to this Section 3 of less than all of the Preferred Shares represented by a particular Preferred Stock Certificate, the Company shall promptly cause to be issued and delivered to the holder of such Preferred Shares a certificate representing the remaining Preferred Shares which have not been redeemed. 4. Dividends. The Company shall not be required to declare or pay a dividend on the Preferred Shares, except as set forth in this Section 4. Dividends on the Preferred Shares shall be payable when, as and if declared by the Board of Directors and shall not be cumulative. No cash dividend or other distribution (other than a stock dividend giving rise to an adjustment under Section 1(g) hereof) shall be paid, or declared and set apart for payment, on any share of 13 any series of preferred stock ranking junior to the Preferred Shares or on any Common Stock, unless a pro rata cash dividend or other distribution is paid, or declared and set apart for payment, with respect to all outstanding Preferred Shares based on the number of shares of Common Stock into which such Preferred Shares are convertible pursuant to Section 1 hereof as of the record date for determination of the holders of capital stock of the Company entitled to such dividend or distribution. In the event of the conversion of any Preferred Shares pursuant to Section 3 hereof, all accrued and unpaid dividends on such Preferred Shares shall be paid in cash unless any holder thereof, by written notice to the Company, requests that such dividends be converted into Common Stock, the amount of such accrued but unpaid dividends on such Preferred Shares shall be taken into account in determining the number of shares of Common Stock into which such Preferred Shares are convertible, as provided in Section 1(c) hereof. 5. Reservation of Shares. The Company shall, so long as any of the Preferred Shares are outstanding, reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Shares, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Preferred Shares then outstanding. 6. Voting Rights. Holders of Preferred Shares shall have no voting rights, except as required by law, including but not limited to the General Corporation Law of the State of Delaware, and as expressly provided in this Certificate of Designations. 7. Liquidation. Dissolution. Winding-Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of the Preferred Shares shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution to its stockholders (the "Liquidation Funds"), before any amount shall be paid to the holders of any of the capital stock of the Company of any class junior in rank to the Preferred Shares in respect of the preferences as to the distributions and payments on the liquidation, dissolution and winding up of the Company, an amount per Preferred Share equal to the Stated Value of such Preferred Share (the "Liquidation Preference"); provided that, if the Liquidation Funds are insufficient to pay the full amount due to the holders of Preferred Shares and holders of shares of other classes or series of preferred stock of the Company that are of equal rank with the Preferred Shares as to payments of Liquidation Funds (the "Pari Passu Shares"), then each holder of Preferred Shares and Pari Passu Shares shall receive a percentage of the Liquidation Funds equal to the full amount of Liquidation Funds payable to such holder as a liquidation preference, in accordance with their respective Certificate of Designations, Preferences and Rights, as a percentage of the full amount of Liquidation Funds payable to all holders of Preferred Shares and Pari Passu Shares. In addition to the receipt of the Liquidation Preference, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of the Preferred Shares shall be entitled to receive Liquidation Funds distributed to holders of Common Stock, after the Liquidation Preference has been paid, to the same extent as if such holders of Preferred Shares had converted the Preferred Shares into Common Stock (without regard to any limitations on conversions herein or elsewhere) and had held such shares of Common Stock on the record date for such distribution of the remaining Liquidation Funds. The purchase or redemption by the Company of stock of any class, in any manner permitted by law, shall not, for the purposes hereof, be regarded as a liquidation, dissolution or winding up of the Company. Neither the consolidation or merger of 14 the Company with or into any other Person, nor the sale or transfer by the Company of less than substantially all of its assets, shall, for the purposes hereof, be deemed to be a liquidation, dissolution or winding up of the Company. No holder of Preferred Shares shall be entitled to receive any amounts with respect thereto upon any liquidation, dissolution or winding up of the Company other than the amounts provided for herein; provided that a holder of Preferred Shares shall be entitled to all amounts previously accrued with respect to amounts owed hereunder. 8. Preferred Rank. All shares of Common Stock shall be of junior rank to all Preferred Shares in respect to the preferences as to distributions and payments upon the liquidation, dissolution and winding up of the Company. The rights of the shares of Common Stock shall be subject to the preferences and relative rights of the Preferred Shares. Without the prior express written consent of the holders of not less than two-thirds (2/3) of the then outstanding Preferred Shares, the Company shall not hereafter authorize or issue additional or other capital stock that ranks senior to the Preferred Shares in respect of the preferences as to distributions and payments upon the liquidation, dissolution and winding up of the Company. Without the prior express written consent of the holders of not less than two-thirds (2/3) of the then outstanding Preferred Shares, the Company shall not hereafter authorize or make any amendment to the Company's Certificate of Incorporation or bylaws, or file any resolution of the board of directors of the Company with the Secretary of State or enter into any agreement containing any provisions, which would adversely affect or otherwise impair the rights or relative priority of the holders of the Preferred Shares relative to the holders of the Common Stock or the holders of any other class of capital stock. In the event of the merger or consolidation of the Company with or into another corporation, the Preferred Shares shall maintain their relative powers, designations and preferences provided for herein and no merger shall result inconsistent therewith. 9. Limitation on Number of Conversion Shares. The Company shall not be obligated to issue any shares of Common Stock upon conversion of the Preferred Shares if the issuance of such shares of Common Stock would exceed that number of shares of Common Stock which the Company may issue upon Conversion of the Preferred Shares (the "Exchange Cap") without breaching the Company's obligations under the rules or regulations of the Nasdaq National Market, or the market or exchange where the Common Stock is then traded, except that such limitation shall not apply in the event that the Company (a) obtains the approval of its stockholders as required by the applicable rules of the Nasdaq National Market, or the market or exchange where the Common Stock is then traded (or any successor rule or regulation), for issuances of Common Stock in excess of such amount or (b) obtains a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory to the holders of a majority of the Preferred Shares then outstanding. Until such approval or written opinion is obtained, no purchaser of Preferred Shares pursuant to the Securities Purchase Agreement (the "Purchasers") shall be issued, upon conversion of Preferred Shares, shares of Common Stock in an amount greater than the product of (i) the Exchange Cap amount multiplied by (ii) a fraction, the numerator of which is the number of Preferred Shares issued to such Purchaser pursuant to the Securities Purchase Agreement and the denominator of which is the aggregate amount of all the Preferred Shares issued to the Purchasers pursuant to the Securities Purchase Agreement (the "Cap Allocation Amount"). In the event that any Purchaser shall sell or otherwise transfer any of such Purchaser's Preferred Shares, the transferee shall be allocated a pro rata portion of such Purchaser's Cap Allocation Amount. In the event that any holder of Preferred Shares shall convert all of such holder's 15 Preferred Shares into a number of shares of Common Stock which, in the aggregate, is less than such holder's Cap Allocation Amount, then the difference between such holder's Cap Allocation Amount and the number of shares of Common Stock actually issued to such holder shall be allocated to the respective Cap Allocation Amounts of the remaining holders of Preferred Shares on a pro rata basis in proportion to the number of Preferred Shares then held by each such holder. 10. Vote to Change the Terms of Preferred Shares. The affirmative vote at a meeting duly called for such purpose, or the written consent without a meeting, of the holders of not less than two-thirds (2/3) of the then outstanding Preferred Shares, shall be required for any change to this Certificate of Designations or the Company's Certificate of Incorporation which would amend, alter, change or repeal any of the powers, designations, preferences and rights of the Preferred Shares. 11. Lost or Stolen Certificates. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Preferred Stock Certificates representing the Preferred Shares, and, in the case of loss, theft or destruction, of an indemnification undertaking by the holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of the Preferred Stock Certificate(s), the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date; provided, however, the Company shall not be obligated to re-issue preferred stock certificates if the holder contemporaneously requests the Company to convert such Preferred Shares into Common Stock. 12. Remedies. Characterizations, Other Obligations. Breaches and Injunctive Relief. The remedies provided in this Certificate of Designations shall be cumulative and in addition to all other remedies available under this Certificate of Designations, at law or in equity (including a decree of specific performance and/or other injunctive relief); no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder's right to pursue actual damages for any failure by the Company to comply with the terms of this Certificate of Designations. The Company covenants to each holder of Preferred Shares that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holders of the Preferred Shares and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holders of the Preferred Shares shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required. 13. Specific Shall Not Limit General; Construction. No specific provision contained in this Certificate of Designations shall limit or modify any more general provision contained herein. This Certificate of Designations shall be deemed to be jointly drafted by the Company and the Buyer and shall not be construed against any person as the drafter hereof. 16 14. Failure or Indulgence Not Waiver. No failure or delay on the part of a holder of Preferred Shares in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. IN WITNESS WHEREOF, the Company has caused this Certificate of Designations, Preferences and Rights of Series A Preferred Stock to be signed by Richard Reiss, its President and Chief Executive Officer, as of the 14th day of June 2000. WIRE ONE TECHNOLOGIES, INC. By: /s/ Richard Reiss -------------------------- Name: Richard Reiss Title: President and CEO 17 EXHIBIT I ISSUER CONVERSION NOTICE Reference is made to the Certificate of Designations, Preferences and Rights of WIRE ONE TECHNOLOGIES INC. (the "Certificate of Designations"). In accordance with and pursuant to the Certificate of Designations, the undersigned hereby elects to convert the number of shares of SERIES A PREFERRED STOCK, par value $.0001 per share (the "Preferred Shares"), of WIRE ONE TECHNOLOGIES INC., a Delaware corporation (the "Company"), indicated below into shares of Common Stock, par value $.0001 per share (the "Common Stock"), of the Company, by tendering the stock certificate(s) representing the share(s) of Preferred Shares specified below as of the date specified below. Date of Conversion: ___________________________________________ Number of Preferred Shares to be converted: __________________________ Stock certificate no(s). of Preferred Shares to be converted: ________ Please confirm the following information: Conversion Price: ___________________________________________ Number of shares of Common Stock to be issued: _______________________ Is the Alternative Conversion Price being relied on pursuant to Section 1(g)(iv) of the Certificate of Designations? (check one) YES________ NO_________ Please issue the Common Stock into which the Preferred Shares are being converted and, if applicable, any check drawn on an account of the Company in the following name and to the following address: Issue to: ______________________________ ______________________________ ______________________________ Facsimile Number: ______________________________ Authorization: ______________________________ By:___________________________ Title:________________________ Dated: ______________________________ Account Number: (if electronic book entry transfer): ______________________________ Transaction Code Number (if electronic book entry transfer): ______________________________ 18 EX-4.2 3 0003.txt REGISTRATION RIGHTS AGREEMENT. REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 14, 2000, by and between Wire One Technologies, Inc., a Delaware corporation (the "Company"), and the undersigned investors (each, an "Investor" and, collectively, "the Investors"). WHEREAS, in connection with the Preferred Stock and Warrant Purchase Agreement by and among the parties hereto of even date herewith (the "Purchase Agreement"), the Company has agreed, upon the terms and subject to the conditions contained therein, to issue and sell to the Investors (i) 2,450 shares of its Series A Convertible Preferred Stock (the "Preferred Stock") that are convertible into shares (the "Conversion Shares") of the Company's common stock, par value $.0001 per share (the "Common Stock"), upon the terms and subject to the limitations and conditions set forth in the Certificate of Designations, Rights, Preferences, Privileges and Restrictions with respect to the Preferred Stock (the "Certificate of Designations") and (ii) warrants (the "Warrants") to acquire 857,500 shares of Common Stock (the "Warrant Shares") issued to the Investors upon the terms and conditions and subject to the limitations and conditions set forth in the Warrants dated June 14, 2000; and WHEREAS, to induce the Investors to execute and deliver the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended (the "Act"), and applicable state securities law. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Definitions. For the purposes of this Agreement: The term "Affiliate" means, with respect to any person or entity, any other person or entity directly or indirectly controlling, controlled by or under common control with the first such person or entity. The term "Closing Date" means the date of the Closing as such term is defined in the Purchase Agreement. The term "current market value" means the volume-weighted average sale price per share of Common Stock as reported by Bloomberg Information Services, Inc. for the 30 consecutive trading days ending one day prior to the date of determination. The term "Holder" means a holder of Registrable Securities or, unless the context otherwise requires, securities convertible into or exercisable for Registrable Securities. The terms "register", "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement. The term "Registrable Securities" means the Conversion Shares and the Warrant Shares, and any shares of capital stock issued or issuable in respect of the foregoing as a result of any stock split, stock dividend, recapitalization, reclassification, exchange, combination, merger, consolidation, distribution or similar event; provided, however, that an Investor's Registrable Securities shall cease to be Registrable Securities when and to the extent that (i) such Registrable Securities have been sold pursuant to an effective registration statement under the Act, (ii) such Registrable Securities have become eligible for resale pursuant to Rule 144(k) of the Act (or any similar provision then in force) or another provision of Rule 144 of the Act pursuant to which all of such Investor's Registrable Securities are eligible for resale or (iii) such Registrable Securities have ceased to be outstanding. The term "Registration Statement" means a registration statement of the Company filed under the 1933 Act. The term "SEC" means the United States Securities and Exchange Commission. 2. Registration Rights. 2.1. Mandatory Registration. (a) The Company shall prepare and, as soon as practicable but in no event later than forty five (45) days after the Closing Date, file with the SEC a Registration Statement on Form S-1 covering the resale of all of the Registrable Securities. The Company shall use its commercially reasonable efforts to have the Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the date which is the earlier of (i) one hundred twenty (120) days after the Closing Date or (ii) five (5) days after receiving a "no review" status from the SEC with respect to such Registration Statement; (b) If the Registration Statement covering the Registrable Securities required to be filed by the Company pursuant to Section 2.1(a) hereof is not declared effective by the SEC within 120 days after the Closing Date, then for each month (prorated for partial months) following such 120-day period prior to the date the Registration Statement is declared effective, the Company will issue to each Investor warrants to purchase 2% of the amount of Purchase Price paid by such Investor pursuant to the Purchase Agreement at an exercise price of the current market value of the Common Stock; provided, however, that there shall be excluded from such 120-day period any delays which are solely attibutable to changes required by the Investors in the Registration Statement with respect to information relating to the Investors, including, without limitation, changes to the plan of distribution, or the failure of Investors to conduct their review of the Registration Statement pursuant to Section 2.2(c) below in a reasonably timely manner. 2 2.2. Obligations of the Company. At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2.1(a), the Company will use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall: (a) Prepare and file with the SEC a Registration Statement with respect to the Registrable Securities no later than forty five (45) days after the Closing Date pursuant to Section 2.1(a) and use its commercially reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective as soon as possible after such filing but in no event later than the date which is the earlier of (i) one hundred twenty (120) days after the Closing Date or (ii) five (5) days after receiving a "no review" status from the SEC with respect to such Registration Statement, and keep such Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date as of which the Investors may sell all of the Registrable Securities without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto) or (ii) the date on which the Investors shall have sold all the Registrable Securities, which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall 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 in which they were made, not misleading. (b) Prepare and file with the SEC 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 applicable law with respect to the disposition of all securities covered by such Registration Statement. (c) Furnish to each Holder of Registrable Securities registering such securities such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of applicable law, and such other documents as each such Holder may reasonably request in order to facilitate the disposition of Registrable Securities owned by it. (d) Use all reasonable efforts to register and qualify the securities covered by such Registration Statement under state blue sky laws in any U.S. jurisdictions in which such registration and qualification is reasonably requested by any Holder; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, subject itself to general taxation or file a general consent to service of process in any such jurisdictions. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in form and substance reasonably satisfactory to the Company, with the managing underwriter of such offering. 3 (f) Promptly notify the Holders: (i) when the Registration Statement, the prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective; (ii) of any request by the SEC for amendments or supplements to the Registration Statement or related prospectus or any written request by the SEC for additional information; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings by any person for that purpose; and (iv) of the receipt by the Company of any written notification with respect to the suspension of the qualification of any Registrable Securities for sale in any jurisdiction or the initiation or overt threat of any proceeding for such purpose. (g) Notify the Holders, at any time when a prospectus relating thereto is required to be delivered under applicable law, of the happening of any event as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and at the request of any such Holder promptly prepare and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an 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 not misleading in the light of the circumstances then existing. (h) Use all reasonable efforts to cause the transfer agent to remove restrictive legends on certificates representing the securities covered by such Registration Statement, as appropriate. (i) Use all reasonable efforts to have the securities covered by the Registration Statement listed on the same quotation system or market as the Common Stock. 2.3. Furnish Information. (a) It shall be a condition precedent to the obligation of the Company to include any Registrable Securities of any Holder in a Registration Statement pursuant to this Section 2 that the Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of such Registrable Securities as shall be required to effect the registration of the Registrable Securities held by such Holder. Any such information, or any comments on any such information included in a draft of a Registration Statement provided to a Holder for its comment, shall be provided to the Company within any reasonable time period requested by the Company. (b) Each Holder shall notify the Company, at any time when a prospectus is required to be delivered under applicable law, of the happening of any event 4 as a result of which the prospectus included in the applicable Registration Statement, as then in effect, in each case only with respect to information provided by such Holder, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. Such Holder shall immediately upon the happening of any such event cease using such prospectus. Any other Holders shall cease using such prospectus immediately upon receipt of notice from the Company to that effect. If so requested by the Company, each Holder promptly shall return to the Company any copies of any prospectus in its possession (other than permanent file copies) that contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. 2.4. Expenses of Registration. The Company shall bear and pay all reasonable expenses incurred in connection with any registration, filing or qualification of Registrable Securities pursuant to this Section 2. Notwithstanding the foregoing, each of the Company and the Holders shall be required to pay and bear their own legal expenses in connection with any registration. 2.5. Underwriting Requirements. In connection with any underwritten offering of a Holder's Registrable Securities, the Company shall not be required to register any Registrable Securities in connection with an underwritten offering unless the Holder accepts the underwriters selected by the Company and then only in such quantity as the lead managing underwriter determines, in its good faith discretion, will not jeopardize the success of the offering by the Company. To the extent that the lead managing underwriter will not permit the registration of all of the Registrable Securities sought to be registered pursuant to this Section 2, the Registrable Securities to be included shall be apportioned among the Holders on a pro rata basis (based on the number of shares of Common Stock proposed to be registered by each). Those Registrable Securities that are excluded from the underwriting by reason of the managing underwriter's marketing limitation and all other Registrable Securities not originally requested to be so included shall not be included in such registration and shall be withheld from the market by the Holders thereof for a period, not to exceed 90 days, which the managing underwriter reasonably determines necessary to effect the underwritten public offering. No Holder of Registrable Securities shall be entitled to participate in an underwritten offering unless such Holder enters into, and performs its obligations under, one or more underwriting agreements and any related agreements and documents (including an escrow agreement and/or a power of attorney with respect to the disposition of the Registrable Securities), in the form that such Holder shall agree to with the lead managing underwriter of the transaction. If any Holder disapproves of the terms of any underwriting, it may elect, prior to the execution of any underwriting agreement, to withdraw therefrom by written notice to the Company and the lead managing underwriter. Any Registrable Securities so withdrawn from an underwriting by such Holder shall be withdrawn from such registration and shall not be transferred in a public distribution prior to 180 days following the effective date of the Registration Statement relating thereto. 5 2.6. Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2. 2.7. Indemnification. In the event any Registrable Securities are included in a Registration Statement under this Section 2: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder and each person, if any, who controls such Holder within the meaning of the Act and the Securities Exchange Act of 1934, as amended (the "1934 Act"), and their respective directors, officers, partners, employees and affiliates (each, an "Indemnified Person"), against any losses, claims, damages, or liabilities, joint or several, to which they may become subject insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any final prospectus contained therein or any amendments or supplements thereto or (ii) the 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 the Company will pay to each Indemnified Person any reasonable legal or other expenses incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission which occurs in reliance upon and in conformity with written information furnished by a Holder expressly for use in connection with such registration or is caused by any failure by the Holder to deliver a prospectus or preliminary prospectus (or amendment or supplement thereto) as and when required under the Act after such prospectus has been timely furnished by the Company. (b) To the extent permitted by law, each Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the Registration Statement, and each person, if any, who controls the Company within the meaning of the Act or the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to which any of the foregoing persons may become subject, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon (x) any untrue statement or alleged untrue statement contained in, or any omission or alleged omission from, information furnished in writing to the Company by the Holder specifically and expressly for use in any such Registration Statement or prospectus or (y) any failure by the Holder to deliver a prospectus or preliminary prospectus (or amendment or supplement thereto) as and when required under the Act after such prospectus has been timely furnished by the Company. Such Holder will pay any reasonable legal or other expenses incurred by any Indemnified Person pursuant to this Section 2.7(b) in connection with investigating or defending any such loss, claim, 6 damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder. (c) Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.7, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the indemnifying parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate (in the opinion of counsel to the indemnifying party) due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.7. (d) The obligations of the Company and the Holders under this Section 2.7 shall survive the completion of any offering of Registrable Securities under a Registration Statement pursuant to this Section 2. (e) Notwithstanding the foregoing, the indemnification and contribution provisions contained in the underwriting agreement entered into in connection with the underwritten public offering shall supercede the provisions of Section 2.7 and Section 2.8 of this Agreement. 2.8. Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 2.7 to the fullest extent permitted by law; provided, however, that (i) no contribution shall be made under the fault standards set forth in Section 2.7, (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation, and (iii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. 7 2.9. Rule 144 Reporting. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC that permit the sale of the Registrable Securities to the public without registration, the Company agrees to use all reasonable efforts to: (a) Make and keep public information available, as those terms are understood and defined in SEC Rule 144 or any similar or analogous rule promulgated under the Act, at all times after the effective date of the first registration filed by the Company for an offering of its securities to the general public; (b) File with the SEC, in a timely manner, all reports and other documents required of the Company under the 1934 Act; and (c) So long as a Holder owns any Registrable Securities, furnish such Holder forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 of the Act, and of the 1934 Act (at any time after it has become subject to such reporting requirements); a copy of the most recent annual or quarterly report of the Company; and such other reports and documents as a Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration. 3. Miscellaneous. 3.1. Successors and Assigns. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties hereto. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. Nothing contained herein shall be construed as permitting any transfer of any securities of the Company in violation of any applicable law or agreement. 3.2. Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to Section 2 may be assigned by a Holder to a permitted transferee or assignee of Registrable Securities which (a) is a subsidiary, parent, general partner, limited partner, retired partner, Affiliate, beneficial owner, member or retired member of a Holder, or (b) is a Holder's family member or trust for the benefit of an individual Holder; provided, however, (i) the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned and (ii) such transferee shall agree to be subject to all restrictions set forth in this Agreement. 3.3. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State. Each of the Investors and the Company hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in 8 the City of New York, Borough of Manhattan, for purposes of all legal proceedings arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the Investors and the Company irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 3.4. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. Each party hereto hereby further warrants and represents that such party has reviewed this waiver with its legal counsel, and that such party knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and this waiver shall apply to any subsequent amendments, supplements or modifications to (or assignments of) this agreement. In the event of litigation, this agreement may be filed as a written consent to a trial (without a jury) by the court. 3.5. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. 3.6. Captions and Headings. The captions and headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 3.7. Notices. Unless otherwise provided, any notice or other communication required or permitted to be given or effected under this Agreement shall be in writing and shall be deemed effective upon personal or facsimile delivery to the party to be notified or three business days after deposit with an internationally recognized courier service, delivery fees prepaid, and addressed to the party to be notified at the following respective addresses, or at such other addresses as may be designated by written notice; provided, however, that any notice of change of address shall be deemed effective only upon receipt. If to the Company: Wire One Technologies, Inc. 225 Long Avenue Hillside, NJ 07205 Attn: Richard Reiss Phone: (973) 282-2000 Fax: (973) 282-2033 with a copy to: Morrison & Foerster LLP 1290 Avenue of the Americas 9 New York, New York 10104 Attn: Michael J.W. Rennock, Esq. Phone: (212) 468-8000 Fax: (212) 468-7900 If to the Investors: Notice shall be sent to the person and addressindicated on the signature page hereof. 3.8. Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained written consent of the Holders of at least a majority of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure and upon obtaining such consent will bond all Holders, including those who did not consent; provided, however, that no amendment, modification, supplement, waiver or consent to the departure with respect to the provisions of Section 2.7 hereof shall be effective as against any person unless consented to in writing by such person. Notwithstanding the foregoing, any Holder may waive its own rights under this Agreement. 3.9. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 3.10. Entire Agreement. This Agreement contains the entire understanding of the parties hereto with respect to the subject matter contained herein, and supersedes and cancels all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, respecting such subject matter. There are no restrictions, promises, representations, warranties, agreements or undertakings of any party hereto with respect to the matters contemplated hereby, other than those set forth herein or made hereunder. 10 IN WITNESS WHEREOF, the parties, each by its duly authorized signatory, have executed this Agreement as of the date first above written. Wire One Technologies, Inc. INVESTORS: Peconic Fund Ltd. By: /s/ Richard Reiss By: Marren Ogilvie --------------------------- -------------- Name: Richard Reiss Name: Marren Ogilvie Title: President and CEO Title: General Counsel of Ramius Capital Group, its investment advisor Address: 666 Third Avenue, 26th Floor New York, New York 10017 Facsimile: 212.845.7995 Telephone: 212.845.7909 11 WIRE ONE TECHNOLOGIES, INC. REGISTRATION RIGHTS AGREEMENT Counterpart Signature Page INVESTORS: Adrien W. Mauerman Test Trust By: /s/ George S. Mauerman ---------------------- Name: George S. Mauerman Title: Trustee Address: P.O. Box 116427 Carrollton, Texas 75011 Facsimile: 815-846-8597 Telephone: 815-896-8813 /s/ Matthew Balk ---------------- Name: Matthew Balk Address: 245 Park Avenue, 44th Floor New York, New York 10167 Facsimile: 212.856.5709 Telephone: 212.856.5700 /s/ Stephen D. Barrett ---------------------- Name: Stephen D. Barrett Address: One Boston Place Boston, MA 02108 Facsimile: 617.788.9581 Telephone: 617.277.3100 12 Counterpart Signature Page INVESTORS: Baystar Capital, L.P. By: /s/ Michael A. Roth ------------------- Name: Michael A. Roth Title: Partner Address: 1500 W. Market St., Suite 200 Mequon, WI 53092 Facsimile: Telephone: Baystar International, LTD. By: /s/ Michael A. Roth ------------------- Name: Michael A. Roth Title: Partner Address: 1500 W. Market St., Suite 200 Mequon, WI 53092 Facsimile: Telephone: /s/ Spence Beal --------------- Name: Spence Beal Address: 6726 E. Northwest Highway Dallas, Texas 75231 Facsimile: Telephone: 214.454.7293 13 Counterpart Signature Page INVESTORS: /s/ Ivan Berkowitz ------------------ Name: Ivan Berkowitz Address: 1790 Broadway, #1500 New York, New York 10019 Facsimile: 212.757.3423 Telephone: 212.757.3333 Carnes Investment By: /s/ Jon Richard Carnes ---------------------- Name: Jon Richard Carnes Title: Address:2204 Madagascar Lane Las Vegas, Nevada 89117 Facsimile: 702.214.8491 Telephone: 702.214.8490 Castle Creek Partners, LLC By: /s/ Fred Goldman ---------------- Name: Fred Goldman Title: Member Address: 77 W. Wacker Drive, Ste. 4040 Chicago, Illinois 60601 Facsimile: 312.499.6999 Telephone: 312.499.6400 14 Counterpart Signature Page INVESTORS: Cranshire Capital LLP By: /s/ Illegible -------------------------------------- Name: Title: President - Downsview Capital Address: 666 Dundee Park, Suite 1901 Northbrook, IL 60062 Facsimile: 847.562.9031 Telephone: 847.562.9030 /s/ Eric R. Elliott ------------------- Name: Eric R. Elliott Address: 2875 Pine Tree Drive Miami Beach, Florida 33140 Facsimile: 305.538.5655 Telephone: 305.534.7400 Global Euronet Group, Inc. By: /s/ Christopher D. Jennings --------------------------- Name: Christopher D. Jennings Title: Co-Chief Executive Officer Address: 11601 Wilshire Blvd., Ste. 500 Los Angeles, CA 90025 Facsimile: 310.575.4813 Telephone: 310.575.4810 15 Counterpart Signature Page INVESTORS: /s/ Christopher M. Healy ------------------------ Name: Christopher M. Healy Address: 86 Bayberry Lane Westport, CT 06880 Facsimile: 203.222.0944 Telephone: 203.454.4671 /s/Richard & Ricki Hoffman JTWROS --------------------------------- Name: Richard & Ricki Hoffman JTWROS Address: 1200 Harbor Road Hewlett Harbor, New York 11557 Facsimile: 212.594.0630 Telephone: 212.594.0707 /s/ Michael Kooper ------------------ Name: Michael Kooper Address: 770 Lexington Ave., 14th Fl. New York, New York 10021 Facsimile: 212.755.0800 Telephone: 212.755.0830 16 Counterpart Signature Page INVESTORS: The Norman Spivock Trust By: /s/ The Norman Spivock Trust - 1993 ----------------------------------- Name: The Norman Spivock Trust-1993 Title: Address: c/o Dragon Capital 1 Minerva Place Old Greenwich, CT 06870 Facsimile: 212.656.1810 Telephone: 203.613.4750 Polycom, Inc. By: /s/ Michael R. Koury -------------------- Name: Michael R. Koury Title: CFO Address: 1565 Barber Lane Milpitas, CA 95035 Facsimile: 408-474-2955 Telephone: 408-474-2844 R&G Partners By: /s/ Camalyn Randolph and /s/ Josh Gilbert ----------------------------------------- Name: Camalyn Randolph & Josh Gilbert Title: Partners Address: 15456 Coutolene Road Magalia, CA 95954 Facsimile: 530.873.5087 Telephone: 530.873.5083 17 Counterpart Signature Page INVESTORS: Reinhard Stadler Rev. Trust By: /s/ Reinhard Stadler Rev. Trust ------------------------------- Name: Title: Address: Wornser Str. 3 76185 Karlsruhe Germany Facsimile: 972.765.1138 Telephone: 214.837.2468 /s/ Leopold Salkind ------------------- Name: Leopold Salkind Address: 2101 Walnut Street, Apt. 620 Philadelphia, Pennsylvania 19103 Facsimile: 215.914.2365 Telephone: 215.694.4047 The dotCOM Fund, LLC By: /s/ Mark Rice ------------- Name: Mark Rice Title: Manager - Minamax LLC Address: 666 Dundee Road, Suite 1901 Northbrook, Illinois 60062 Facsimile: 847.509.2295 Telephone: 847.509.2290 18 Counterpart Signature Page INVESTORS: /s/ Scott Weisman ----------------- Name: Scott Weisman Address: 16 Colonial Road White Plains, New York Facsimile: 212.856.5750 Telephone: 212.856.5709 David Wilstein and Susan WIlstein, trustees of the Century Trust By: /s/ David Wilstein ---------------------- Name: David Wilstein Title: Trustee Address: 2080 Century Park East, Penthouse Suite Los Angeles, CA 90067 Facsimile: 310.553.0205 Telephone: 310.553.4906 /s/ Eric Singer ---------------------- Name: Eric Singer Address: 72 Hicks Street Brooklyn, NY 11201 Facsimile: 212.856.5750 Telephone: 212.856.5700 /s/ Gene Salkind ---------------------- Name: Gene Salkind Address: 1165 Wrack Rd. Jenkintown, PA 190446-2543 Facsimile: 215.914.3165 Telephone: 212.886.8874 /s/ Robert B. Prag ---------------------- Name: Robert B. Prag Address: 2455 El Amigo Rd. Del Mar, CA 92014 Facsimile: 858.794.9544 Telephone: 858.794.9500 19 EX-4.3 4 0004.txt FORM OF WARRANT THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE SECURITIES LAWS. WIRE ONE TECHNOLOGIES, INC. WARRANT TO PURCHASE COMMON STOCK Warrant No.: Number of Shares: ------------------------ ------------- Date of Issuance: June 14, 2000 Wire One Technologies, Inc., a Delaware corporation (the "COMPANY"), hereby certifies that, for Ten and 50/100 United States Dollars ($10.50) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, _____________________________, the registered holder hereof or its permitted assigns, is entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or after the date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as defined herein) _______________________ (________) fully paid and nonassessable shares of Common Stock (as defined herein) of the Company (the "WARRANT SHARES") at the purchase price per share provided in Section l(b) below; provided, however, that in no event shall the holder be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such exercise. For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the holder and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such proviso is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the holder and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the holder and its affiliates (including, without limitation, any convertible notes or preferred stock) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock a holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company's most recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to conversions of Preferred Shares and exercise of Warrants (as defined below) by such holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. Section 1. (a) Securities Purchase Agreement. This Warrant is one of the Warrants (the "PREFERRED SHARE WARRANTS") issued pursuant to Section 1 of that certain Preferred Stock and Warrant Purchase Agreement dated as of June 14, 2000, among the Company and the Buyer referred to therein (the "SECURITIES PURCHASE AGREEMENT"). (b) Definitions. The following words and terms as used in this Warrant shall have the following meanings: (i) "APPROVED STOCK PLAN" shall mean any employee benefit plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director, consultant or other service provider of the Company. (ii) "BUSINESS DAY" means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed. (iii) "CERTIFICATE OF DESIGNATION" means the Certificate of Designations, Preferences and Rights of Series A Preferred Stock of the Company. (iv) "CLOSING BID PRICE" means, for any security as of any date, the last closing bid price for such security at 4:00 p.m. Eastern Standard Time on the Nasdaq National Market as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the Nasdaq National Market is not the principal trading market for such security, the last closing bid price of such security at 4:00 p.m. Eastern Standard Time on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price of such security in the over the counter market on the electronic bulletin board for such security at 4:00 p.m. Eastern Standard Time as reported by Bloomberg, or, if no closing bid price is reported for such security by Bloomberg, the last closing trade price for such security as 2 reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid and ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Bid Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Company. (All such determinations to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period.) (v) "CLOSING SALE PRICE" means, for any security as of any date, the last closing trade price for such security at 4:00 p.m. Eastern Standard Time on the Nasdaq National Market as reported by Bloomberg, or, if the Nasdaq National Market is not the principal securities exchange or trading market for such security, the last closing trade price of such security at 4:00 p.m. Eastern Standard Time on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing trade price of such security in the over-the-counter market on the electronic bulletin board for such security at 4:00 p.m. Eastern Standard Time as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the closing bid and ask price of such security as reported by Bloomberg, or, if no closing ask or bid prices are reported for such security by Bloomberg, the average of the bid and ask prices of any market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Sale Price cannot be calculated for such security on such date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Company. (All such determinations to be appropriately adjusted for any stock dividend, stock split or other similar transaction during such period). (vi) "COMMON STOCK" means (i) the Company's common stock, par value $0.0001 per share, and (ii) any capital stock into which such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock. (vii) "COMMON STOCK DEEMED OUTSTANDING" means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Sections 8(b)(i) and 8(b)(ii) hereof regardless of whether the Options (as defined below) or Convertible Securities (as defined below) are actually exercisable or convertible at such time, but excluding any shares of Common Stock owned or held by or for the account of the Company or issuable upon exercise of the Preferred Share Warrants. (viii) "CONVERTIBLE SECURITIES" means any stock or securities (other than Options) directly or indirectly convertible into or exchangeable for Common Stock. (ix) "EXPIRATION DATE" means the date five (5) years from the date of this Warrant or, if such date falls on a Saturday, Sunday or other day on which banks are required or authorized to be closed in the City of New York or the State of New York or 3 on which trading does not take place on the principal exchange or automated quotation system on which the Common Stock is traded (a "HOLIDAY"), the next date that is not a Holiday. (x) "MARKET PRICE" means, with respect to any security for any period, the average Closing Bid Price during the 10 Business Days immediately preceding the date of determination. (xi) "OPTIONS" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. (xii) "OTHER SECURITIES" means (i) those warrants of the Company issued prior to, and outstanding on, the date of issuance of this Warrant, (ii) the Preferred Shares and (iii) the shares of Common Stock issued upon conversion of the Preferred Shares. (xiii) "PERSON" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. (xiv) "PREFERRED SHARES" means the shares of the Company's Series A Preferred Stock issued pursuant to the Securities Purchase Agreement. (xv) "SECURITIES ACT" means the Securities Act of 1933, as amended. (xvi) "WARRANT" means this Warrant and all Warrants issued in exchange, transfer or replacement thereof. (xvii) "WARRANT EXERCISE PRICE" shall be equal to, with respect to any Warrant Share, $10.50, subject to adjustment as hereinafter provided. (xviii) "WARRANT PERIOD" means the period beginning on the date hereof and ending on and including the Expiration Date. (c) Other Definitional Provisions. (i) Except as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company's successors and (B) to any applicable law defined or referred to herein, shall be deemed references to such applicable law as the same may have been or may be amended or supplemented from time to time. (ii) When used in this Warrant, the words "herein," "hereof" and "hereunder," and words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words "Section," "Schedule," and "Exhibit" shall refer to Sections of, and Schedules and Exhibits to, this Warrant unless otherwise specified. 4 (iii) Whenever the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa. Section 2. Exercise of Warrant. (a) Subject to the terms and conditions hereof, this Warrant may be exercised by the holder hereof then registered on the books of the Company, in whole or in part, at any time on any Business Day on or after the opening of business on the date hereof and prior to 11:59 P.M. Eastern Time on the Expiration Date by (i) delivery of a written notice, in the form of the subscription notice attached as Exhibit A hereto (the "EXERCISE NOTICE"), of such holder's election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, (ii) payment to the Company of an amount equal to the applicable Warrant Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (plus any applicable issue or transfer taxes) (the "AGGREGATE EXERCISE PRICE") in cash or wire transfer of immediately available funds and (iii) the surrender to a common carrier for overnight delivery to the Company as soon as practicable following such date, this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction); provided, that if such Warrant Shares are to be issued in any name other than that of the registered holder of this Warrant, such issuance shall be deemed a transfer and the provisions of Section 7 shall be applicable. In the event of any exercise of the rights represented by this Warrant in compliance with this Section 2(a), the Company shall on the third Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price and this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) (the "EXERCISE DELIVERY DOCUMENTS"), credit such aggregate number of shares of Common Stock to which the holder shall be entitled to the holder's or its designee's balance account with The Depository Trust Company; provided, however, if the holder who submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, then the Company shall, on or before the third Business Day following receipt of the Exercise Delivery Documents, issue and surrender to a common carrier for overnight delivery to the address specified in the Exercise Notice, a certificate, registered in the name of the holder, for the number of shares of Common Stock to which the holder shall be entitled pursuant to such request. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (ii) above or notification to the Company of a Cashless Exercise referred to in Section 2(e), the holder of this Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant shares, with respect to which this Warrant has been exercised, irrespective of the date of delivery of this Warrant as required by clause (iii) above or the certificates evidencing such Warrant Shares. In the case of a dispute as to the determination of the Warrant Exercise Price, the last reported sale price (as reported by Bloomberg) or the Market Price of a security or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the holder the number of shares of Common Stock that is not disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within one (1) Business Day of receipt of the holder's subscription notice. If the holder and the Company are unable to agree upon the determination of the Warrant Exercise Price, the last reported sale price (as reported by Bloomberg) or Market Price or arithmetic calculation of the Warrant Shares within one day of such disputed determination or arithmetic calculation being submitted to the holder, then the Company shall immediately submit via facsimile (i) the disputed determination of the Warrant Exercise Price, the last reported sale price (as reported by 5 Bloomberg) or the Market Price to an independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent, outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the holder of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such investment banking firm's or accountant's determination or calculation, as the case may be, shall be deemed conclusive absent manifest error. (b) Unless the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable and in no event later than five (5) Business Days after any exercise and at its own expense, issue a new Warrant identical in all respects to this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised. (c) No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock issued upon exercise of this Warrant shall be rounded up or down to the nearest whole number. (d) Notwithstanding anything contained herein to the contrary and in addition to and not in lieu of any of the other rights and remedies to which the holder may be entitled by reason of the Company's failure fully to meet its obligations under the Securities Purchase Agreement or the Registration Rights Agreement, the holder of this Warrant may, at its election exercised in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the "Net Number" of shares of Common Stock determined according to the following formula (a "CASHLESS EXERCISE") : Net Number = (A x B) - (A x C) ----------------- B For purposes of the foregoing formula: A=the total number shares with respect to which this Warrant is then being exercised. B=the last reported sale price (as reported by Bloomberg) of the Common Stock on the date immediately preceding the date of the subscription notice. C =the Warrant Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise. Section 3. Covenants as to Common Stock. The Company hereby covenants and agrees as follows: 6 (a) This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly issued. (b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof. (c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved the number of shares of Common Stock needed to provide for the exercise of the rights then represented by this Warrant. (d) The Company shall promptly secure the listing of the shares of Common Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system. (e) The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant. No impairment of the designations, preferences and rights of the Preferred Shares contained in the Certificate of Designation or any waiver thereof which has an adverse effect on the rights granted hereunder shall be given effect until the Company has taken appropriate action (satisfactory to the holders of Preferred Share Warrants representing a majority of the shares of Common Stock issuable upon the exercise of such Preferred Share Warrants then outstanding) to avoid such adverse effect with respect to this Warrant. (f) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. Section 4. Taxes. Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of Common Stock or other securities or property in a name other than that of the registered holders of this Warrant to be converted and such holder shall pay such amount, if any, to cover any applicable transfer or similar tax. 7 Section 5. Warrant Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein, no holder, as such, of this Warrant shall be entitled to vote or receive dividends or be deemed the holder of shares of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the holder of this Warrant with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders. Section 6. Representations of Holder. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. The holder of this Warrant further represents, by acceptance hereof, that, as of this date, such holder is an "accredited investor" as such term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act (an "ACCREDITED INVESTOR"). Upon exercise of this Warrant, other than pursuant to a Cashless Exercise, the holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired solely for the holder's own account and not as a nominee for any other party, for investment and not with a view toward distribution or resale and that such holder is an Accredited Investor. If such holder cannot make such representations because they would be factually incorrect, it shall be a condition to such holder's exercise of this Warrant that the Company receive such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon exercise of this Warrant shall not violate any United States or state securities laws. Section 7. Ownership and Transfer. (a) The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary. 8 (b) This Warrant and the rights granted hereunder shall be assignable by the holder hereof without the consent of the Company. (c) The Company is obligated to register the Warrant Shares for resale under the Securities Act pursuant to the Registration Rights Agreement dated June 14, 2000 by and between the Company and the Investors set forth therein (the "REGISTRATION RIGHTS AGREEMENT"), and the initial holder of this Warrant (and certain assignees thereof) is entitled to the registration rights in respect of the Warrant Shares as set forth in the Registration Rights Agreement. Section 8. Adjustment of Warrant Exercise Price and Number of Shares. The Warrant Exercise Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted from time to time as follows: (a) Adjustment of Warrant Exercise Price and Number of Shares upon Issuance of Common Stock. If and whenever on or after the date of issuance of this Warrant, the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock (other than shares of Common Stock deemed to have been issued by the Company in connection with an Approved Stock Plan or upon exercise or conversion of the Other Securities) for a consideration per share less than a price (the "APPLICABLE PRICE") equal to the Warrant Exercise Price in effect immediately prior to such issuance or sale, then immediately after such issuance or sale the Warrant Exercise Price then in effect shall be reduced to an amount equal to the product of (x) the Warrant Exercise Price in effect immediately prior to such issuance or sale and (y) the quotient determined by dividing (1) the sum of (I) the product of the Applicable Price and the number of shares of Common Stock Deemed Outstanding immediately prior to such issuance or sale, and (II) the consideration, if any, received by the Company upon such issuance or sale, by (2) the product of (I) the Applicable Price and (II) the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale. Upon each such adjustment of the Warrant Exercise Price hereunder, the number of shares of Common Stock acquirable upon exercise of this Warrant shall be adjusted to the number of shares determined by multiplying the Warrant Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Warrant Exercise Price resulting from such adjustment. (b) Effect on Warrant Exercise Price of Certain Events. For purposes of determining the adjusted Warrant Exercise Price under Section 8(a) above, the following shall be applicable: (i) Issuance of Options. If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 8(b)(i), the "lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities "shall be equal to the sum of the 9 lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities. Upon the expiration or termination of any unexercised Option, such Warrant Exercise Price shall be readjusted to such amount as would have obtained had the adjustment made upon the granting or issuance of such Option been made based upon the issuance of only the number of shares of Common Stock actually issued on exercise of such Option. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 8(b)(i) to the extent that such adjustment is based solely on the fact that the Convertible Securities issuable upon exercise of such Option are convertible into or exchangeable for Common Stock at a price which varies with the market price of the Common Stock. (ii) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 8(b)(ii), the "lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange "shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion or exchange of such Convertible Security. No further adjustment of the Warrant Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Warrant Exercise Price had been or are to be made pursuant to other provisions of this Section 8(b), no further adjustment of the Warrant Exercise Price shall be made by reason of such issuance or sale. Upon the expiration of any rights of conversion or exchange under such Convertible Securities, such Warrant Exercise Price shall be readjusted to such amount as would have obtained had the adjustment made upon the granting or issuance of such Convertible Securities been made based upon the issuance of only the number of shares of Common Stock actually issued on conversion of such Convertible Securities. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 8(b)(ii) to the extent that such adjustment is based solely on the fact that such Convertible Securities are convertible into or exchangeable for Common Stock at a price which varies with the market price of the Common Stock. (iii) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issuance, conversion or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Warrant Exercise Price in effect at the time of such change shall be 10 adjusted to the Warrant Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold and the number of shares of Common Stock acquirable hereunder shall be correspondingly readjusted. For purposes of this Section 8(b)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. (c) Adjustment of Warrant Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after the date of issuance of this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately decreased. Any adjustment under this Section 8(d) shall become effective at the close of business on the date the subdivision or combination becomes effective. If, at any time or from time to time, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or any Convertible Securities, then, following the record date fixed for the determination of holders of Common Stock entitled to receive such stock dividend, a provision shall be made so that the Holder of this Warrant shall receive upon exercise thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Company that it would have received if (A) this Warrant had been exercised into Common Stock on the date of such event and (B) it had thereafter retained such securities and all rights and distributions relating to them. (d) Minimum Adjustment of Warrant Exercise Price. No adjustment of the Warrant Exercise Price shall be made under this Section 8 in an amount of less than 1% of the Warrant Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Warrant Exercise Price. No adjustments shall be made pursuant to this Section 8 which would result in an increase in the Warrant Exercise Price. (e) Certain Events. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Preferred Share Warrants; 11 provided that no such adjustment will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable as otherwise determined pursuant to this Section 8. (f) Notices. (i) Immediately upon any adjustment of a Warrant Exercise Price, the Company will give written notice thereof to the holder of this Warrant, setting forth in reasonable detail, and certifying, the calculation of such adjustment. (ii) The Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder. Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company's assets to another Person or other transaction in each case which is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an "ORGANIC CHANGE." (iii) The Company will also give written notice to the holder of this Warrant at least ten (10) days prior to the date on which any Organic Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction with such notice being provided to such holder. Section 9. Redemption. (a) On not less than thirty (30) days notice given at any time when the registration statement covering the resale of the shares of Common Stock issuable upon exercise of the Warrant required to be filed by the Company pursuant to Registration Rights Agreement is effective and which shall remain effective during such 30 day notice period, the Warrants may be redeemed, at the option of the Company, at a redemption price of $0.10 per Warrant, provided the Closing Sale Price of the Common Stock issuable upon exercise of this Warrant shall equal or exceed 200% of the then Exercise Price for a period of twenty (20) consecutive trading days ending at least three (3) days prior to the date of the notice of redemption. (b) If the conditions set forth in Section 9(a) are met, and the Company elects to exercise its right to redeem the Warrants, it shall mail a notice of redemption to each of the registered holders of the Warrants to be redeemed, first class, postage prepaid, not later than the thirtieth day before the date fixed for redemption, at their last address as shall appear on the records maintained pursuant to Section 12. Any notice mailed in the manner provided herein shall be conclusively presumed to have been duly given whether or not the registered holder receives such notice. 12 (c) The notice of redemption shall specify (i) the redemption price, (ii) the date fixed for redemption, and (iii) that the right to exercise the Warrant shall terminate at 5:00 P.M. (New York time) on the business day immediately preceding the date fixed for redemption. The date fixed for the redemption of the Warrant shall be the "REDEMPTION DATE." No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity of the proceedings for such redemption except as to a registered holder (A) to whom notice was not mailed or (B) whose notice was defective. An affidavit of the warrant agent or of the Secretary or an Assistant Secretary of the Company that notice of redemption has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein. (d) Any right to exercise a Warrant shall terminate at 5:00 P.M. (New York time) on the business day immediately preceding the Redemption Date. On and after the Redemption Date, holders of the Warrants shall have no further rights except to receive, upon surrender of the Warrant, the redemption price. (e) From and after the Redemption Date specified, the Company shall, at the place specified in the notice of redemption, upon presentation and surrender to the Company by or on behalf of the registered holder thereof of one or more Warrant Certificates evidencing Warrants to be redeemed, deliver or cause to be delivered to or upon the written order of such Holder a sum in cash equal to the redemption price of each such Warrant. From and after the Redemption Date and upon the deposit or setting aside by the Company of a sum sufficient to redeem all the Warrants called for redemption, such Warrants shall expire and become void and all rights hereunder and under the Warrant Certificates, except the right to receive payment of the redemption price, shall cease. Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall, on receipt of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Section 11. Notice. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) ; or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: 13 If to the Company: Wire One Technologies, Inc. 225 Long Avenue Hillside, New Jersey 07205 Telephone: (973) 282-2000 Facsimile: (973) 282-2033 Attention: President With a copy to: Morrison & Foerster LLP 1290 Avenue of the Americas New York, NY 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Attention: Michael J.W. Rennock, Esq. If to the holder: To the address set forth above immediately below such holder's name on the signature pages in the Securities Purchase Agreement. Each party shall provide five days' prior written notice to the other party of any change in address or facsimile number. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. Section 12. Date. The date of this Warrant is June 14, 2000. This Warrant, in all events, shall be wholly void and of no effect after the close of business on the Expiration Date, except that notwithstanding any other provisions hereof, the provisions of Section 7 shall continue in full force and effect after such date as to any Warrant Shares or other securities issued upon the exercise of this Warrant. Section 13. Amendment and Waiver. Except as otherwise provided herein, the provisions of the Preferred Share Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the holders of Preferred Share Warrants representing a majority of the shares of Common Stock obtainable upon exercise of the Preferred Share Warrants then outstanding; provided that no such action may increase the Warrant Exercise Price of the Preferred Share Warrants or decrease the number of shares or class of stock obtainable upon exercise of any Preferred Share Warrant without the written consent of the holder of such Preferred Share Warrant. Section 14. Descriptive Headings; Governing Law. The descriptive headings of the several Sections and paragraphs of this Warrant are inserted for convenience only and do not 14 constitute a part of this Warrant. The corporate laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York, or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. WIRE ONE TECHNOLOGIES, INC. By: --------------------------------------- Rich Reiss President and Chief Executive Officer 15 EXHIBIT A TO WARRANT SUBSCRIPTION FORM TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT WIRE ONE TECHNOLOGIES, INC. The undersigned holder hereby exercises the right to purchase _____________________ (_______) of the shares of Common Stock ("WARRANT SHARES") of Wire One Technologies, Inc., a Delaware corporation (the "COMPANY"), evidenced by the attached Warrant (the "WARRANT"). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant. 1. Form of Warrant Exercise Price. The Holder intends that payment of the Warrant Exercise Price shall be made as : ___________ a "Cash Exercise" with respect to _____________ Warrant Shares; and/or ___________ a "Cashless Exercise" with respect to ___________ Warrant Shares (to the extent permitted by the terms of the Warrant). 2. Payment of Warrant Exercise Price. The holder shall pay the sum of $________ to the Company in accordance with the terms of the Warrant. 3. Delivery of Warrant Shares. The Company shall deliver to the holder _________ Warrant Shares in accordance with the terms of the Warrant. Date: ___________ _, ____ - ------------------------------------ Name of Registered Holder By: ---------------------------------------------- Name: Title: EXHIBIT B TO WARRANT FORM OF WARRANT POWER FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to ___________, Federal Identification No. _____________, a warrant to purchase ____________ shares of the capital stock of Wire One Technologies, Inc., a Delaware corporation, represented by warrant certificate no. _________, standing in the name of the undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute and appoint ___________, attorney to transfer the warrants of said corporation, with full power of substitution in the premises. Dated: ______, _____ [HOLDER] By: -------------------------------------- Its: -------------------------------------- EX-10.1 5 0005.txt PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 14, 2000, by and among Wire One Technologies, Inc., a Delaware corporation, with headquarters located at 225 Long Avenue, Hillside, New Jersey 07205 (the "COMPANY"), and each of the purchasers set forth on the signature pages hereto (the "BUYERS"). WHEREAS: A. The Company and Buyers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 of Regulation D ("REGULATION D") as promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 ACT") and/or Section 4(2) of the 1933 Act; B. The Company has authorized the issuance of 2,450 shares of its Series A Preferred Stock, par value $.0001 per share (the "PREFERRED STOCK"), which shall be convertible into shares of the Company's Common Stock, par value $.0001 per share (the "COMMON STOCK") (as converted, the "CONVERSION SHARES"), in accordance with the terms of the Company's Certificate of Designations, Preferences and Rights of the Preferred Stock, substantially in the form attached hereto as Exhibit A (the "CERTIFICATE OF DESIGNATIONS"); C. The Buyers wish to purchase, upon the terms and conditions stated in this Agreement, an aggregate of up to 2,450 shares of the Preferred Stock (the "PREFERRED SHARES") and warrants, in substantially the form attached hereto as Exhibit B (the "WARRANTS"), to acquire 857,500 shares of Common Stock (as exercised, collectively, the "WARRANT SHARES"); and D. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement substantially in the form attached hereto as Exhibit C (the "REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws. NOW THEREFORE, the Company and Buyers hereby agree as follows: 1. PURCHASE AND SALE OF PREFERRED SHARES. a. Purchase of Preferred Shares. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall issue and sell to each Buyer and each Buyer agrees to purchase from the Company such number of Preferred Shares and number of Warrants to acquire the Warrant Shares for the aggregate purchase price (the "PURCHASE PRICE") as is set forth immediately below such Buyer's name on the signature pages hereto (the "CLOSING"). -1- b. Closing Date. The date and time of the Closing (the "CLOSING DATE") shall be 10:00 a.m. Eastern Standard Time, within three (3) business days following the date hereof, subject to notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below (or such later date as is mutually agreed to by the Company and Buyer). The Closing shall occur on the Closing Date at the offices of Morrison & Foerster LLP, 1290 Avenue of the Americas, New York, NY 10104-0050. c. Form of Payment. On the Closing Date, (i) each Buyer shall pay the Purchase Price to the Company for the Preferred Shares and Warrants to be issued and sold to such Buyer at the Closing, by wire transfer of immediately available funds in accordance with the Company's written wire instructions, and (ii) the Company shall deliver to each Buyer, or promptly thereafter, stock certificates (in the denominations that such Buyer shall request) (the "PREFERRED STOCK CERTIFICATES") representing such number of the Preferred Shares which such Buyer is then purchasing along with the Warrants such Buyer is purchasing hereunder, duly executed on behalf of the Company and registered in the name of each Buyer or its designee. 2. BUYER'S REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and not jointly) represents and warrants to the Company solely as to such Buyer that: a. Investment Purpose. Buyer (i) is acquiring the Preferred Shares and the Warrants, (ii) upon conversion of the Preferred Shares, will acquire the Conversion Shares then issuable and (iii) upon exercise of the Warrants, will acquire the Warrant Shares issuable upon exercise thereof (the Preferred Shares, the Conversion Shares, the Warrants and the Warrant Shares collectively are referred to herein as the "SECURITIES"), for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempt from registration under the 1933 Act; provided, however, that by making the representations herein, Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act. b. Accredited Investor Status. Buyer is an "accredited investor" as that term is defined in Rule 501(a) (3) of Regulation D. c. Reliance on Exemptions. Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Securities. d. Information. Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by Buyer. Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither -2- such inquiries nor any other due diligence investigations conducted by Buyer or its advisors, if any, or its representatives shall modify, amend or affect Buyer's right to rely on the Company's representations and warranties contained in Section 3 below. Buyer understands that its investment in the Securities involves a high degree of risk. Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities. e. No Governmental Review. Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities. f. Transfer or Resale. Buyer understands that except as provided in the Registration Rights Agreement: (i) the Securities have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 promulgated under the 1933 Act, as amended, or any successor rule thereto ("RULE 144"); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. g. Legends. Buyer understands that the certificates or other instruments representing the Preferred Shares and the Warrants and, until such time as the sale of the Conversion Shares and the Warrant Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the stock certificates representing the Conversion Shares and the Warrant Shares, except as set forth below, shall bear a restrictive legend in substantially the following form (and a stop transfer order may be placed against transfer of such stock certificates): THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT -3- REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped, if, unless otherwise required by state securities laws, (i) such Securities are registered for sale under the 1933 Act, (ii) in connection with a sale transaction, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment or transfer of the Securities may be made without registration under the 1933 Act, or (iii) such holder provides the Company with reasonable assurances that the Securities can be sold pursuant to Rule 144 without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold. h. Validity; Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of Buyer and is a valid and binding agreement of Buyer enforceable against Buyer in accordance with its terms, subject as to enforceability to general principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Buyer that: a. Organization and Qualification. The Company and its "SUBSIDIARIES" (which for purposes of this Agreement means any entity in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest) are corporations duly organized and validly existing in good standing under the laws of the jurisdiction in which they are incorporated, and have the requisite corporate power and authorization to own their properties and to carry on their business as now being conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, "Material Adverse Effect" means any material adverse effect on the business, properties, assets, operations, results or operations, financial condition or prospects of the Company and its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents (as defined below). The Company has no Subsidiaries except as set forth on Schedule 3(a). b. Authorization; Enforcement; Validity. (i) The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions (as defined in Section 5), the Warrants and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the "TRANSACTION DOCUMENTS"), and -4- to issue the Securities in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents and the Certificate of Designations by the Company and the consummation by it of the transactions contemplated hereby and thereby, including without limitation the issuance of the Preferred Shares and the Warrants and the reservation for issuance and the issuance of the Conversion Shares and the Warrant Shares issuable upon conversion or exercise thereof, have been duly authorized by the Company's Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders, (iii) the Transaction Documents have been duly executed and delivered by the Company, (iv) the Transaction Documents constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors' rights and remedies, and (v) prior to the Closing Date, the Certificate of Designations has been filed with the Secretary of State of the State of Delaware and will be in full force and effect, enforceable against the Company in accordance with its terms. c. Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 100,000,000 shares of Common Stock, of which as of the date hereof, 16,572,205 shares are issued and outstanding, 5,375,322 shares are reserved for issuance pursuant to the Company's stock option and purchase plans and 900,809 shares are issuable and reserved for issuance pursuant to securities (other than the Preferred Shares and the Warrants) exercisable or exchangeable for, or convertible into, shares of Common Stock, (ii) 5,000,000 shares of preferred stock, consisting of 2,500 shares of Series A Preferred Stock, of which as of the date hereof no shares are issued and outstanding. All of such outstanding shares have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as disclosed in Schedule 3(c), (i) no shares of the Company's capital stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) none of the Company or any of its Subsidiaries has any outstanding debt securities, (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company or any of its Subsidiaries, (iv) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act (except the Registration Rights Agreement), (v) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries, (vi) there are no securities or instruments containing antidilution or similar provisions that will be triggered by the issuance of the Securities as described in this Agreement, and (vii) the Company does not have any stock appreciation rights or stock "phantom stock" plans or agreements or any similar plan or agreement. The Company has furnished to the Buyer true and complete copies of the Company's Certificate of Incorporation, as amended and as in effect on the date hereof (the -5- "CERTIFICATE OF INCORPORATION"), and the Company's By-laws as amended and as in effect on the date hereof (the "BY-LAWS"). d. Issuance of Securities. The Preferred Shares have been duly authorized and, upon issuance in accordance with the terms hereof, shall be (i) validly issued, fully paid and nonassessable, (ii) free from all taxes, liens and charges with respect to the issue thereof and (iii) entitled to the rights and preferences set forth in the Certificate of Designations. 4,357,500 shares of Common Stock (subject to adjustment pursuant to the Company's covenant set forth in Section 4(f) below) have been duly authorized and reserved for issuance upon conversion of the Preferred Shares and upon exercise of the Warrants. Upon conversion or exercise in accordance with the Certificate of Designations or the Warrants, as the case may be, the Conversion Shares and the Warrant Shares will be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. The issuance by the Company of the Securities is exempt from registration under the 1933 Act. e. No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the performance by the Company of its obligations under the Certificate of Designations and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the reservation for issuance and the issuance and registration of the Conversion Shares and the Warrant Shares) will not (i) result in a material violation of the Certificate of Incorporation or the By-laws or (ii) materially conflict with, or constitute a material default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or result in a material violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Nasdaq National Market) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected. Neither the Company nor its Subsidiaries is in material violation of any term of or in default under its Certificate of Incorporation or the By-laws or their organizational charter or by-laws, respectively. Neither the Company nor any of its Subsidiaries is in material violation of any term of or in default under any contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or its Subsidiaries, except for such violations that would not have a Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted in violation of any law, ordinance or regulation of any governmental entity, except for violations the sanctions for which either individually or in the aggregate would not have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the 1933 Act, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents or to perform its obligations under the Certificate of Designations, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the Nasdaq National Market. -6- f. SEC Documents; Financial Statements. Since December 31, 1999, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "1934 ACT") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC DOCUMENTS"). The Company has delivered, or made available, to Buyer or its representatives true and complete copies of the SEC Documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Neither the Company nor any of its Subsidiaries or any of their officers, directors, employees or agents have provided Buyer with any material, nonpublic information. g. Absence of Certain Changes. Since March 31, 2000 there has been no material adverse change and no material adverse development in the business, properties, operations, financial condition, results of operations or prospects of the Company or its Subsidiaries. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company or any of its Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings. Since March 31, 2000 the Company has not declared or paid any dividends, sold any assets in excess of $500,000 outside of the ordinary course of business or had capital expenditures in excess of $1,000,000. h. Absence of Litigation. There is no material action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of the Company Subsidiaries. i. No Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or exists, or is contemplated to occur, with respect to the Company or its Subsidiaries or their respective business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws in a registration statement filed with the SEC relating -7- to an issuance and sale by the Company of its Common Stock and which has not been publicly announced. j. No General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. k. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Securities under the 1933 Act or cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated, nor will the Company or any of its Subsidiaries take any action or steps that would require registration of any of the Securities under the 1933 Act or cause the offering of the Securities to be integrated with other offerings. l. Intellectual Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. Except as set forth on Schedule 3(l), none of the Company's trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights have expired or terminated, or are expected to expire or terminate within two years from the date of this Agreement. The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others and, except as set forth on Schedule 3(l), there is no claim, action or proceeding being made or brought against, or to the Company's knowledge, being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secret or other infringement; and the Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, and the Company is not aware of any third party making any unauthorized or infringing use of the intellectual properties of the Company or any of its Subsidiaries. m. Environmental Laws. The Company and its Subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to -8- conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval except where, in any of the three foregoing cases, the failure to so comply would not have, individually or in the aggregate, a Material Adverse Effect. n. Title. The Company and its Subsidiaries have good and marketable title to all real property and good title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries. Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries. o. Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company and its Subsidiaries, taken as a whole. p. Regulatory Permits. The Company and its Subsidiaries possess all material certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. q. Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general specific or authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. r. Taxes. The Company and each of its Subsidiaries has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision -9- reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. s. Transactions With Affiliates. Except as set forth on Schedule 3(s) and in the SEC Documents filed at least ten days prior to the date hereof and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 4. COVENANTS. a. Best Efforts. Each party shall use its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement. b. Form D and Blue Sky. The Company agrees to file, if applicable, a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to Buyer at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of the United States, and shall provide evidence of any such action so taken to Buyer on or prior to the Closing Date. The Company shall make all filings and reports relating the offer and sale of the Securities required under applicable securities or "Blue Sky" laws of the states of the United States following the Closing Date. c. Reporting Status. Until the earlier of (i) the date which is one year after the date as of which the Investor (as that term is defined in the Registration Rights Agreement) may sell all of the Conversion Shares and the Warrant Shares without restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto), or (ii) the date on which (A) the Investors shall have sold all the Conversion Shares and the Warrant Shares and (B) none of the Preferred Shares or Warrants is outstanding (the "REGISTRATION PERIOD"), the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such termination. d. Use of Proceeds. The Company will use the proceeds from the sale of the Preferred Shares for substantially the same purposes and in substantially the same amounts as indicated in Schedule 4(d). -10- e. Financial Information. The Company agrees to send the following to each Investor (as that term is defined in the Registration Rights Agreement) during the Registration Period: (i) within ten (10) business days after the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K, including any amendments to such documents, and any registration statements (other than on Form S-8) or amendments filed pursuant to the 1933 Act; and (ii) copies of any notices and other information made available or given to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders. f. Reservation of Shares. The Company shall take all action necessary to at all times have authorized, and reserved for the purpose of issuance, no less than the number of shares of Common Stock needed to provide for the issuance of the shares of Common Stock upon conversion of all outstanding Preferred Shares and the number of shares of Common Stock needed to provide for the issuance of the shares of Common Stock upon exercise of all outstanding Warrants. g. Listing. The Company shall promptly secure the listing of all of the Registrable Securities (as defined in the Registration Rights Agreement) upon each national securities exchange and automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Registrable Securities from time to time issuable under the terms of the Transaction Documents and the Certificate of Designations. The Company shall maintain the Common Stock's authorization for quotation on the Nasdaq National Market. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Nasdaq National Market. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(g). h. Filing of Form 8-K. The Company shall file a Form 8-K with the SEC describing the terms of the transactions contemplated by the Transaction Documents in the form, and within the time period, required by the 1934 Act. i. Expenses. Each party shall bear its own expenses in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith, including, without limitation, attorneys' and consultants' fees and expenses. 5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent, to issue certificates, registered in the name of each Buyer or its nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Preferred Shares or exercise of the Warrants (the "IRREVOCABLE TRANSFER AGENT INSTRUCTIONS"). Prior to registration of the Conversion Shares and the Warrant Shares under the 1933 Act, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, -11- and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares and the Warrant Shares, prior to registration of the Conversion Shares and the Warrant Shares under the 1933 Act) will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement. In lieu of delivering physical certificates representing the Common Stock issuable upon the conversion of the Preferred Shares or exercise of the Warrants, provided the Company's transfer agent is participating in the Depositary Trust Company ("DTC") Fast Automated Securities Transfer program, on the written request of Buyer (who shall have previously instructed its broker to confirm such request to the Company's transfer agent), the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such Common Stock to the Buyer by crediting the account of Buyer's prime broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system no later than the date upon which the Company is required to deliver shares to the Buyer under the terms of this Agreement. Nothing in this Section 5 shall affect in any way Buyer's obligations and agreements set forth in Section 2(g) to comply with all applicable prospectus delivery requirements, if any, upon resale of the Securities. If Buyer provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment or transfer of the Securities may be made without registration under the 1933 Act or Buyer provides the Company with reasonable assurances that the Securities can be sold pursuant to Rule 144 without any restriction as to the number of securities acquired as of a particular date that can then be immediately sold, the Company shall permit the transfer, and, in the case of the Conversion Shares and the Warrant Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by Buyer and without any restrictive legend. 6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company hereunder to issue and sell the Preferred Shares to a Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof: a. The applicable Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company. b. The Certificate of Designations shall have been filed with the Secretary of State of the State of Delaware. c. The applicable Buyer shall have delivered to the Company the Purchase Price for the Preferred Shares and the related Warrants being purchased by such Buyer at the Closing by wire transfer of immediately available funds pursuant to the wire instructions provided by the Company. d. The representations and warranties of the applicable Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific -12- date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Closing Date. 7. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE. The obligation of each Buyer hereunder to purchase the Preferred Shares at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer's sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof: a. The Company shall have executed each of the Transaction Documents and delivered the same to the Buyer. b. The Certificate of Designations shall have been filed with the Secretary of State of the State of Delaware, and a copy thereof certified by such Secretary of State shall have been delivered to such Buyer. c. The Common Stock shall be authorized for quotation on the Nasdaq National Market, trading in the Common Stock shall not have been suspended by the SEC or the Nasdaq National Market and the Conversion Shares and the Warrant Shares shall be listed upon the Nasdaq National Market. d. The representations and warranties of the Company shall be true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in Section 3 above, in which case, such representations and warranties shall be true and correct without further qualification) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. Each Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to the foregoing effect, in the form attached here to as Exhibit D. e. The Company shall have executed and delivered to such Buyer the Warrants and the Preferred Stock Certificates (in such denominations as Buyer shall have requested) in writing for the Preferred Shares and Warrants being purchased by such Buyer at the Closing. f. The Board of Directors of the Company shall have adopted resolutions authorizing the issuance of the Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares and the other transactions provided by this Agreement and the Transaction Documents. -13- g. As of the Closing Date, the Company shall have reserved out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Shares and the exercise of the Warrants, at least 4,357,500 shares of Common Stock. h. The Irrevocable Transfer Agent Instructions, in the form of Exhibit E attached hereto, shall have been delivered to and acknowledged in writing by the Company's transfer agent. i. Buyer shall have received the opinion of the Company's counsel dated as of the Closing Date, in form, scope and substance reasonably satisfactory to Buyer and in substantially the form of Exhibit F attached hereto. j. The Company shall have delivered to such Buyer a certificate evidencing the incorporation and good standing of the Company and each Subsidiary in such corporation's state of incorporation issued by the Secretary of State of such state of incorporation as of a date within 10 days of the Closing Date. k. The Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation as certified by the Secretary of State of the State of Delaware within 10 days of the Closing Date. l. The Company shall have delivered to such Buyer a secretary's certificate, dated as the Closing Date, as to (i) the resolutions described in Section 7(g) and (ii) the Bylaws, each as in effect at the Closing. m. The Company shall have made all filings under all applicable federal and state securities laws necessary to consummate the issuance of the Securities pursuant to this Agreement in compliance with such laws. n. The Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as such Buyer or its counsel reasonably request. 8. GOVERNING LAW; MISCELLANEOUS. a. Governing Law; Jurisdiction; Jury Trial. The corporate laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the nonexclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party -14- hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. b. Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. c. Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. d. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction. e. Entire Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between Buyers, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor Buyers make any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the holders of at least two-thirds (2/3) of the Preferred Shares then outstanding, and no provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Preferred Shares then outstanding. f. Notices. Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: -15- If to the Company: Wire One Technologies, Inc. 225 Long Avenue Hillside, New Jersey 07205 Telephone: (973) 282-2000 Facsimile: (973) 282-2033 Attention: President With a copy to: Morrision & Foerster LLP 1290 Avenue of the Americas New York, NY 10104 Telephone: (212) 468-8000 Facsimile: (212) 468-7900 Attention: Michael J.W. Rennock, Esq. If to the Transfer Agent: American Stock Trust & Transfer Company 6201 15th Avenue Brooklyn, New York 11219 Telephone: (718) 921-8208 Facsimile: (718) 921-8335 Attention: Geraldine Zarbo If to a Buyer: To the address set forth above immediately below such Buyer's name the signature pages hereto Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively. g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Preferred Shares. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the holders of at least two-thirds (2/3) of the Preferred Shares then outstanding, including by merger or consolidation. A Buyer may assign some or all of its rights hereunder without the consent of the Company, provided, however, that any such assignment shall not release such Buyer from its obligations hereunder unless such obligations are assumed by such assignee and the Company has consented to such -16- assignment and assumption. Notwithstanding anything to the contrary contained in the Transaction Documents, each Buyer shall be entitled to pledge the Securities in connection with a bona fide margin account. h. No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. i. Survival. Unless this Agreement is terminated under Section 8(l), the representations and warranties of the Company and the Buyers contained in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 8 shall survive the Closing. j. Publicity. The Company and Buyers shall have the right to approve before issuance any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of Buyers, to make any press release or other public disclosure with respect to such transactions as is required by applicable law and regulations (although Buyers shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release and shall be provided with a copy thereof). The company agrees to issue a press release with respect to the transactions contemplated hereby within 48 hours after the Closing. k. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. l. Termination. In the event that the Closing shall not have occurred on or before five (5) business days from the date hereof due to the Company's or such Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above (and the nonbreaching party's failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to terminate this Agreement with respect to such breaching party at the close of business on such date without liability of any party to any other party. m. Placement Agent. The Company acknowledges that it has engaged H.C. Wainwright & Co., Inc. as placement agent in connection with the sale of the Preferred Shares and the related Warrants, which placement agent may have formally or informally engaged other agents on its behalf. The Company shall be responsible for the payment of any placement agent's fees or broker's commissions relating to or arising out of the transactions contemplated hereby. The Company shall pay, and hold Buyers harmless against, any liability, loss or expense (including, without limitation, attorneys' fees and out of pocket expenses) in connection with any such claim. n. No Strict Construction. The language used in this Agreement will deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. -17- o. Remedies. Buyers and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and the Certificate of Designations and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. * * * * * * IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused this Preferred Stock and Warrant Purchase Agreement to be duly executed as of the date first written above. COMPANY: BUYERS: - ------- ------ WIRE ONE TECHNOLOGIES, INC. PECONIC FUND LTD. By: /s/ Richard Reiss By: /s/ Marren Ogilvie ----------------- ------------------ Name: Richard Reiss Name: Marren Ogilvie Title: President and CEO Title: General Counsel of Ramius Capital Group, its investment advisor Address: 666 Third Avenue, 26th Floor New York, New York 10017 Facsimile: (212) 845-7995 Telephone: (212) 845-7909 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 715 Number of Warrants: 250,250 Aggregate Purchase Price: $5,005,000 -18- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: /s/ Matthew Balk ---------------- Name: Matthew Balk Address: 245 Park Avenue, 44th Floor New York, New York 10167 Facsimile: 212.856.5709 Telephone: 212.856.5700 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 25 Number of Warrants: 8,750 Aggregate Purchase Price: $875,000 /s/ Steve Barrett ----------------- Name: Steve Barrett Address: One Boston Place Boston, MA 02108 Facsimile: 617.788.9851 Telephone: 617.277.3100 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 10 Number of Warrants: 3,500 Aggregate Purchase Price: $70,000 -19- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: Baystar Capital, L.P. By: /s/ Michael A. Roth ------------------- Name: Michael A. Roth Title: Partner Address: 1500 W. Market St., Suite 200 Mequon, WI 53092 Facsimile: 262.240.3215 Telephone: 262.240.3115 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 250 Number of Warrants: 87,500 Aggregate Purchase Price: $1,750,000 Baystar International, LTD. By: /s/ Michael A. Roth ------------------- Name: Michael A. Roth Title: Partner Address: 1500 W. Market St., Suite 200 Mequon, WI 53092 Facsimile: 262.240.3215 Telephone: 262.240.3115 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 107 Number of Warrants: 37,450 Aggregate Purchase Price: $749,000 -20- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: /s/ Spence Beal --------------- Name: Spence Beal Address: 6726 E. Northwest Highway Dallas, Texas 75231 Facsimile: Telephone: 214.454.7293 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 5 Number of Warrants: 1,750 Aggregate Purchase Price: $35,000 /s/ Ivan Berkowitz ------------------ Name: Ivan Berkowitz Address: 1790 Broadway, #1500 New York, New York 10019 Facsimile: 212.757.3423 Telephone: 212.757.3333 AGGREGATE SUBSCRIPTION AMOUNT: $350,000 Number of Shares of Preferred Stock: 50 Number of Warrants: 17,500 Aggregate Purchase Price: $350,000 -21- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: Carnes Investment By: /s/ Jon Richard Carnes ---------------------- Name: Jon Richard Carnes Title: Address: 2204 Madagascar Lane Las Vegas, Nevada 89117 Facsimile: 702.214.8491 Telephone: 702.214.8490 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 60 Number of Warrants: 21,000 Aggregate Purchase Price: $420,000 Castle Creek Partners, LLC By: /s/ Fred Goldman ---------------- Name: Fred Goldman Title: Member Address: 77 W. Wacker Drive, Ste. 4040 Chicago, Illinois 60601 Facsimile: 312.499.6999 Telephone: 312.499.6400 AGGREGATE SUBSCRIPTION AMOUNT: $2,002,000 Number of Shares of Preferred Stock: 280 Number of Warrants: 98,000 Aggregate Purchase Price: $2,002,000 -22- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: Cranshire Capital LLP By: /s/ Illegible -------------------------------------- Name: Title: President - Downsview Capital Address: 666 Dundee Park, Suite 1901 Northbrook, IL 60062 Facsimile: 847.562.9031 Telephone: 847.562.9030 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 143 Number of Warrants: 50,050 Aggregate Purchase Price: $1,001,000 /s/ Eric R. Elliott ------------------- Name: Eric R. Elliott Address: 2875 Pine Tree Drive Miami Beach, Florida 33140 Facsimile: 305.538.5655 Telephone: 305.534.7400 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 40 Number of Warrants: 14,000 Aggregate Purchase Price: $280,000 -23- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: Global EuroNet Group, INC. By: /s/ Christopher D. Jennings --------------------------- Name: Christopher D. Jennings Title: Co-Chief Executive Officer Address: 11601 Wilshire Blvd., Ste. 500 Los Angeles, CA 90025 Facsimile: 310.575.4813 Telephone: 310.575.4810 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 50 Number of Warrants: 17,500 Aggregate Purchase Price: $350,000 /s/ Christopher M. Healy ------------------------ Name: Christopher M. Healy Address: 86 Bayberry Lane Westport, CT 06880 Facsimile: 203.222.0944 Telephone: 203.454.4671 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 20 Number of Warrants: 7,000 Aggregate Purchase Price: $140,000 -24- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: /s/ Richard & Ricki Hoffman JTWROS ---------------------------------- Name: Richard & Ricki Hoffman JTWROS Address: 1200 Harbor Road Hewlett Harbor, New York 11557 Facsimile: 212.594.0630 Telephone: 212.594.0707 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 10 Number of Warrants: 3,500 Aggregate Purchase Price: $70,000 /s/ Michael Kooper ------------------ Name: Michael Kooper Address: 770 Lexington Ave., 14th Fl. New York, New York 10021 Facsimile: 212.755.0800 Telephone: 212.755.0830 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 10 Number of Warrants: 3,500 Aggregate Purchase Price: $70,000 -25- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: The Norman Spivock Trust By: /s/ The Norman Spivock Trust - 1993 ----------------------------------- Name: The Norman Spivock Trust-1993 Title: Address: c/o Dragon Capital 1 Minerva Place Old Greenwich, CT 06870 Facsimile: 212.656.1810 Telephone: 203.613.4750 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 20 Number of Warrants: 7,000 Aggregate Purchase Price: $140,000 Polycom, Inc. By: /s/ Michael R. Koury -------------------- Name: Michael R. Koury Title: CFO Address: 1565 Barber Lane Milpitas, CA 95035 Facsimile: 408-474-2955 Telephone: 408-474-2844 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 143 Number of Warrants: 50,050 Aggregate Purchase Price: $1,001,000 -26- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: R&G Partners By: /s/ Camalyn Randolph & Josh Gilbert ----------------------------------- Name: Camalyn Randolph & Josh Gilbert Title: Partners Address: 15456 Coutolene Road Magalia, CA 95954 Facsimile: 530.873.5087 Telephone: 530.873.5083 AGGREGATE SUBSCRIPTION AMOUNT: $210,000 Number of Shares of Preferred Stock: 30 Number of Warrants: 10,500 Aggregate Purchase Price: $210,000 Reinhard Stadler Rev. Trust By: /s/ Reinhard Stadler Rev. Trust ------------------------------- Name: Title: Address: Wornser Str. 3 76185 Karlsruhe Germany Facsimile: 972.765.1138 Telephone: 214.837.2468 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 5 Number of Warrants: 1,750 Aggregate Purchase Price: $35,000 -27- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: /s/ Gene Salkind ---------------- Name: Gene Salkind Address: 1165 Wrack Road Jenkintown, Pennsylvania 19046 Facsimile: 215.914.3165 Telephone: 215.886.8874 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 100 Number of Warrants: 35,000 Aggregate Purchase Price: $700,000 /s/ Leopold Salkind ------------------- Name: Leopold Salkind Address: 2101 Walnut Street, Apt. 620 Philadelphia, Pennsylvania 19103 Facsimile: 215.914.2365 Telephone: 215.694.4047 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 100 Number of Warrants: 35,000 Aggregate Purchase Price: $700,000 -28- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: The dotCOM Fund, LLC By: /s/ Mark Rice ------------- Name: Mark Rice Title: Manager - Minamax LLC Address: 666 Dundee Road, Suite 1901 Northbrook, Illinois 60062 Facsimile: 847.509.2295 Telephone: 847.509.2290 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 72 Number of Warrants: 25,200 Aggregate Purchase Price: $504,000 /s/ Scott Weisman ----------------- Name: Scott Weisman Address: 16 Colonial Road White Plains, New York Facsimile: 212.856.5750 Telephone: 212.856.5709 AGGREGATE SUBSCRIPTION AMOUNT: $70,000 Number of Shares of Preferred Stock: 10 Number of Warrants: 3,500 Aggregate Purchase Price: $70,000 -29- WIRE ONE TECHNOLOGIES, INC. PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT Counterpart Signature Page BUYERS: Adrien W. Mauerman Test Trust By: /s/ George S. Mauerman ---------------------- Name: George S. Mauerman Title: Trustee Address: P.O. Box 116427 Carrollton, Texas 75011 Facsimile: 815-846-8597 Telephone: 815-896-8813 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 190 Number of Warrants: 66,500 Aggregate Purchase Price: $1,330,000 /s/ Eric Singer --------------- Name: Eric Singer Address: 245 Park Avenue, 44th Floor New York, New York 10167 Facsimile: 212.856.5700 Telephone: 212.856.5750 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 5 Number of Warrants: 1,750 Aggregate Purchase Price: $35,000 David Wilstein and Susan Wilstein, trustees of the Century Trust By: /s/ David Wilstein -------------------- Name: David Wilstein Title: Trustee Address: 2080 Century Park East, Penthouse Suite Los Angeles, CA 90067 Facsimile: 310-553-0205 Telephone: 310-553-4906 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 10 Number of Warrants: 3,500 Aggregate Purchase Price: $70,000 /s/ Robert B. Prag ----------------------- Name: Robert B. Prag Address: 2455 El Amigo Rd. Del Mar, CA 92014 Facsimile: 858.794.9544 Telephone: 858.794.9500 AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 30 Number of Warrants: 10,500 Aggregate Purchase Price: $210,000 -30- SCHEDULES Schedule 3(a) Subsidiaries Schedule 3(c) Capitalization Schedule 3(m) Intellectual Property Schedule 3(s) Transactions with Affiliates Schedule 4(d) Use of Proceeds EXHIBITS Exhibit A Form of Certificate of Designations, Preferences and Rights of the Preferred Shares Exhibit B Form of Warrant Exhibit C Form of Registration Rights Agreement Exhibit D Form of Officers Certificate Exhibit E Form of Irrevocable Transfer Agent Instructions Exhibit F Form of Company Counsel Opinion EX-99.1 6 0006.txt TEXT OF PRESS RELEASE DATED JUNE 16, 2000 EXHIBIT 99.1 Friday June 16, 9:03 Am Eastern Time Company Press Release SOURCE: Wire One Technologies, Inc. Wire One Technologies Completes $17 Million Private Placement HILLSIDE, N.J., June 16 /PRNewswire/ -- Wire One Technologies, Inc. (Nasdaq: WONE - news), a leading video applications service provider, today announced it has completed the private placement of 2,450 shares of a newly designated Series A convertible preferred stock and warrants with a select group of institutional and strategic investors led by Peconic Fund, Ltd., an affiliate of Ramius Capital Group, and Polycom, Inc. (Nasdaq: PLCM - news). The private placement, managed by H.C. Wainwright & Co., Inc., raised gross proceeds of $17.15 million. The preferred stock is convertible into WONE common stock at a price of $7.00 per share, subject to adjustment and certain conditions, over the three year term of the securities. The preferred stock will convert automatically if WONE shares trade at $12.50 or above for twenty consecutive trading days and the underlying common shares have been registered. The Company has agreed to file a registration statement registering the common stock underlying the preferred stock and warrants by July 29, 2000. The preferred stock investors received warrants to purchase up to approximately 857,500 shares of common stock at an exercise price of $10.50 per share over the next five years, subject to adjustment. These warrants may be redeemed by the Company if WONE shares trade above $21.00 for twenty consecutive trading days. The Company expects to use the net proceeds to fuel growth and expand into emerging video applications technologies, including the further development and installation of a global Internet Protocol (IP)-based video communications subscriber service utilizing DSL access, to be introduced by the Company later this year and rolled out globally in 2001. "This funding provides the capital necessary to meet increasing customer demand across North America and around the world," said Richard Reiss, president and chief executive officer. Robert Hagerty, president and CEO of Polycom, said, "We want to ensure the market has access to the most advanced, next-generation voice, video and data applications. Our relationship with Wire One Technologies represents a long-term commitment to refining and expanding mass deployment of video application technologies through broadband communications, including IP-based networks." Ramius Capital Group is a private investment firm that makes direct investments in growth and technology companies. Its principals are Peter Cohen, former chairman and CEO of Shearson Lehman Brothers; Morgan Stark, former president of Chemical Securities; Thomas Strauss, former president of Salomon Brothers; and Jeffrey Solomon, head of direct investments at the firm. Wire One Technologies, Inc. is one of the world's largest video applications service providers (Video-ASPs), providing a full range of state-of-the-art video, voice and network communications solutions to commercial, federal and state government, medical, and education customers nationwide and across the globe. Among these solutions are comprehensive data transmission solutions, video streaming and webcasting services, and shortly, a global Internet Protocol (IP)-based videoconferencing subscriber service, utilizing DSL access, offering substantially reduced transmission costs and dramatically improved quality of service (QOS). Wire One Technologies has sales and marketing agreements with Polycom, Inc., Cisco Systems, RADVision, VCON, PictureTel Corporation, VTEL Corporation, Accord, Madge Networks, Sony Electronics, Lucent, Panasonic, Active Voice, AT&T, Sprint, Covad Communications and Digital Island Inc. The Company is based in Hillside, New Jersey, with some 25 offices nationwide. H. C. Wainwright & Co., Inc., founded in 1868, is a Boston based investment bank that provides integrated research, investment banking and capital markets capabilities in video and voice communications technology, wireless technology, information technology, software and services and healthcare technologies. The statements contained herein, other than historical information, are or may be deemed to be forward-looking statements and involve factors, risks and uncertainties that may cause actual results in future periods to differ materially from such statements. These factors, risks and uncertainties include market acceptance and availability of new products; the non-binding and nonexclusive nature of reseller agreements with manufacturers; rapid technological change affecting products; the impact of competitive products and pricing, as well as competition from other resellers; possible delays in the shipment of new products; and the availability of sufficient financial resources to enable the Company to expand its operations. SOURCE: Wire One Technologies, Inc. -----END PRIVACY-ENHANCED MESSAGE-----