EX-10.11 6 b313557_ex10-11.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT dated as of August __, 2001 between Wire One Technologies, Inc., a Delaware corporation (the "Company"), and the investor listed on the signature page hereto ("Purchaser"). Capitalized terms used herein but not otherwise defined shall have the meaning ascribed to them in the Subscription Agreement (defined below). W I T N E S S E T H: WHEREAS, the Company and Purchaser have entered into a Subscription Agreement, dated as of the date hereof (the "Subscription Agreement"), pursuant to which Purchaser subscribed to purchase, at the Closing, the number of shares of Common Stock and Warrants set forth on the signature page to the Subscription Agreement. As used herein, the term "Purchasers" shall refer to Purchaser collectively with all other purchasers of shares of Common Stock or Warrants in connection with the Offering, each of whom has or will execute a Subscription Agreement. The shares of Common Stock purchased by the Purchasers in the Offering are referred to collectively as "Common Shares", and the shares of Common Stock issuable upon exercise of the Warrants issued to the Purchasers are referred to as "Warrant Shares." The Common Shares and the Warrant Shares are hereinafter referred to collectively as "Registrable Stock". NOW, THEREFORE, in consideration of the respective covenants and conditions of the parties set forth herein and in the Subscription Agreement, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 1. Registration of Registrable Stock. (a) Filing of Registration Statement. The Company shall use its reasonable best efforts to prepare and file within 30 days after the Closing Date a registration statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (collectively, the "Securities Act") covering the offering and sale of the Registrable Stock by the Purchasers in privately negotiated transactions, "brokers' transactions" or in transactions directly with a "market maker," as such terms are defined in paragraphs (f) and (g) of Rule 144 under the Securities Act ("Brokers' Transactions"). (b) Effectiveness; Amendments. The Company shall use its reasonable best efforts (including responding to SEC comments within 10 business days after receipt of such comments) to file and cause to be declared effective within the earlier of 90 days after the Closing Date or five business days after receiving a no-review status from the SEC (the "Effective Date") and, except as set forth below, to remain effective under the Securities Act, the Registration Statement and will prepare and file with the SEC any amendments or post-effective amendments as may be necessary to keep the Registration Statement effective under the Securities Act. The Company will promptly notify the Purchasers in writing of the date on which the Registration Statement is declared effective. Notwithstanding the foregoing, (i) the Company shall not be required to keep the Registration Statement effective for purposes of the sale of Registrable Stock thereunder at any time after the earlier of (A) the date on which all shares of Registrable Stock have been sold or are no longer outstanding, and (B) the date which is two years following the acquisition from the Company of the Registrable Stock, or such earlier date as of which the Purchasers shall be able to make use of the safe-harbor provisions of Rule 144(k) under the Securities Act (or any successor rule) with respect to sales of Registrable Stock. If the Registration Statement has not been declared effective by the SEC on or prior to the Effective Date or if after the Effective Date, a Blackout Event (as defined in (paragraph (e) below)) has occurred and continues for more than thirty (30) days in the aggregate during any twelve (12) month period (such event, a "Registration Default"), the Company shall pay liquidated damages ("Liquidated Damages") to each holder of Registrable Securities equal to 1.5% of the aggregate dollar amount originally invested by such holder as listed on the signature page to the Subscription Agreement of such holder for each thirty (30) day period or portion thereof that the Registration Default continues. The Company shall not be responsible for any Liquidated Damages to any holder other than the original investors that executed Subscription Agreements. Following the cure of all Registration Defaults relating to any particular Registrable Security, the accrual of Liquidated Damages with respect to such Registration Default will cease. (c) Copies of Documents. During the period that the Company has agreed to use its reasonable best efforts to cause the Registration Statement to remain effective (the "Effectiveness Period"), the Company shall furnish to each Purchaser such number of copies of the Registration Statement, the prospectus included therein (the "Prospectus") and any amendments and supplements thereto and any documents incorporated by reference in the Registration Statement as such Purchaser shall reasonably request. (d) Blue Sky Compliance. The Company shall register or qualify or cooperate with the Purchasers in connection with the notification, coordination, registration or qualification (or obtain exemption from such registration or qualification) of the Registrable Stock under such other securities or blue sky laws of such jurisdictions in the United States as the Purchasers reasonably shall request and do any and all other acts and things which may be reasonably necessary to enable the Purchasers to consummate the disposition of the Registrable Stock by them under the Registration Statement in such jurisdictions during the Effectiveness Period; provided, however, that in no event shall the Company be required to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified, to subject itself to taxation in any jurisdiction where it has not theretofore done so or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject. (e) Notification. During the Effectiveness Period, the Company shall notify the Purchasers promptly, and (if requested by any Purchaser) confirm such notice in writing, (i) of any request by the SEC or any other regulatory authority for amendments or supplements to the Registration Statement or the Prospectus or for additional information relating thereto, (ii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iii) of the receipt by the Company of any notification or stop order with respect to the suspension of the registration, qualification or exemption from registration or qualification of any of the shares of Registrable Stock covered by the Registration Statement for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (iv) of the happening of any event which makes any statement made in such Registration Statement or in the Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus so that such documents will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (each, a "Blackout Event"). 2 (f) Supplements and Post-Effective Amendments. During the Effectiveness Period, upon the occurrence of any event contemplated by clause (i) or (iv) of paragraph (e) above, the Company will prepare a supplement or post-effective amendment to the Registration Statement or a supplement to the Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Stock being sold thereunder, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Company, in good faith, may delay the filing of any such amendment or supplement for a reasonable period of time, but in no event more than 15 consecutive trading days, in order to permit the Company (i) to effect disclosure or disposition or consummation of any transaction requiring confidential treatment which is being actively pursued at such time and which would require disclosure in the Registration Statement or (ii) to negotiate, effect or complete any transaction which the Company reasonably believes might be jeopardized, delayed or made more costly to the Company by disclosure in the Registration Statement (g) Listing. The Company shall cause the Registrable Stock covered by the Registration Statement to be listed on each securities exchange or securities quotation system, if any, on which similar securities issued by the Company are then listed. (h) Correspondence with the SEC. The Company shall, upon request from any Purchaser, deliver promptly to such Purchaser copies of all correspondence between the SEC and the Company, its counsel or auditors. (i) Stock Certificates. The Company will cooperate with the Purchasers to facilitate the timely preparation and delivery of certificates representing Registrable Stock sold under the Registration Statement. 2. Piggyback Registration. If at any time prior to the second anniversary of the date hereof the Company proposes to file a registration statement under the Securities Act with respect to an underwritten offering of Common Stock (except on Form S-4 or Form S-8 or any successor forms thereto), for its own account and the Registration Statement contemplated in Section 1(a) has not been filed or has not been declared effective by the SEC, then the Company shall give written notice of such proposed filing to the holders of Registrable Stock as far in advance of the anticipated filing date as is practicable (the "Piggyback Notice"). The Piggyback Notice shall offer such holders the opportunity to register such amount of Registrable Stock as each such holder may request (a "Piggyback Registration"); subject in all events to the agreement of the underwriter or underwriters of the offering contemplated by such registration statement that such shares of Registrable Stock can be included in such registration statement without adversely affecting such offering. Any reduction in the number of securities to be so offered shall be (i) first, pro-rata among all security holders who are exercising "piggyback" registration rights, based on the number of registrable securities originally proposed to be sold by each of them, and (ii) second, pro-rata among all security holders who are exercising "demand" registration rights pursuant to a registration rights agreement with the Company, based on the number of registrable securities originally proposed to be sold by each of them. 3. Obligations of Purchasers. Following the filing of the Registration Statement and during any period that the Registration Statement is effective, each Purchaser shall: (a) not effect any stabilization transactions or engage in any stabilization activity in connection with the Company's Common Stock in contravention of Regulation M under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); 3 (b) furnish each broker through whom any Purchaser offers Registrable Stock such number of copies of the Prospectus as the broker may require and otherwise comply with prospectus delivery requirements under the Securities Act; (c) not (and shall not permit any "affiliated purchaser" (as defined in Rule 100(b)(1) of Regulation M under the Exchange Act) to) bid for or purchase for any account in which any Purchaser has a beneficial interest, or attempt to induce any other person to purchase, any Company Common Stock in contravention of Regulation M under the Exchange Act; (d) cooperate with the Company as the Company fulfills its obligations under Section 1(d) hereof; (e) furnish such information concerning such Purchaser as the Company may from time to time reasonably request; (f) sell Registrable Stock only in privately negotiated transactions or Brokers' Transactions; and (g) not sell under the Registration Statement during any period after the Company has provided notice to such Purchaser pursuant to Section 1(e)(iv) above and until the Company provides to such Purchaser notice that the Registration Statement no longer fails to state a material fact required to be stated therein, misstates a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made not misleading. 4. Expenses. The Company shall be responsible for the payment of (x) all registration and filing fees relating to registration of the offering by the Purchasers of the Registrable Stock, including, without limitation, registration and filing fees (A) with respect to filings required to be made with the SEC or the National Association of Securities Dealers and (B) with respect to registrations and filings made under state securities or blue sky laws and (y) any expenses incurred by the Company in connection with the preparation of the Registration Statement and the Prospectus. The Purchasers shall be responsible for the payment of fees and disbursements of counsel to the Purchasers in connection with the preparation of the Registration Statement and the Prospectus and fees paid to brokers in connection with the sale of any of the Registrable Stock. 5. Indemnification. (a) Indemnity by the Company. The Company shall (i) indemnify and hold harmless each Purchaser and each person who controls such Purchaser, within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities ("Losses"), to which each such indemnified party may become subject, under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or Prospectus, as amended or supplemented if the Company has furnished any supplements or amendments thereto (if used during the period the Company is required to keep the Registration Statement and Prospectus current), or any document filed under a state securities or blue sky law (collectively, "Registration Documents") or insofar as any Losses (or actions in respect thereof) arise out of or are based upon the omission or alleged omission to state in any Registration Document a material fact required to be stated therein or necessary to make the statements made therein (in the case of a prospectus, in the light of the circumstances under which they were made), not misleading, and (ii) reimburse each indemnified party for all legal or other expenses 4 reasonably incurred by it in connection with investigating or defending any such Losses or actions, including any amounts paid in settlement of any litigation, commenced or threatened, if such settlement is effected with the prior written consent of the Company; provided, however, that the Company shall not be liable for any Losses arising out of or based upon any untrue statement or omission made in any Registration Document in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use in the preparation of the Registration Document; and provided, further, that the Company shall not be liable to a particular indemnified party under the indemnity agreement in this Section 5(a) with respect to the Prospectus, as amended or supplemented, to the extent that the Loss arises from the sale of any shares of Registrable Stock by such indemnified party to the person asserting Loss and to which there was not sent or given, within the time required by the Securities Act, a copy of the Prospectus as then amended or supplemented, if the Company has previously furnished copies thereof to such indemnified party and such Prospectus as then amended or supplemented has corrected the misstatement or omission at issue. (b) Indemnity by Purchasers. Each Purchaser shall, (i) indemnify and hold harmless the Company, any officer, director, employee or agent of the Company, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any Losses to which each such indemnified party may become subject under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Document, or arise out of or are based upon the omission or alleged omission to state in any Registration Document a material fact required to be stated therein or necessary to make the statements made therein (in the case of a prospectus, in the light of the circumstances under which they were made), not misleading, and (ii) reimburse each indemnified party for all legal or other expenses reasonably incurred by it in connection with investigating or defending any such Losses or action, including any amounts paid in settlement of any litigation, commenced or threatened, if such settlement is effected with the prior written consent of such Purchaser; provided, however, that such indemnification or reimbursement shall be payable only if, and to the extent that, any Losses arise out of or are based upon an untrue statement or omission made in any Registration Document in reliance upon and in conformity with written information furnished to the Company by such Purchaser expressly for use in the preparation thereof. (c) Procedure for Indemnification. Promptly after receipt by an indemnified party, under Section 5(a) or 5(b), of notice of the commencement of any action, the indemnified party shall notify the indemnifying party in writing of the commencement thereof, if a claim in respect thereof is to be made against an indemnifying party under any of these Sections; but the omission of such notice shall not relieve the indemnifying party from liability which it may have to the indemnified party under this Section 5, except to the extent that the indemnifying party is actually prejudiced in any material respect by such failure to give notice, and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Section 5. In case the event that an action is brought against the indemnified party and such indemnified party notifies the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and to the extent that it chooses, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party that it so chooses, the indemnifying party shall not be liable for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided however, that (i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the claim within 20 days after receiving notice from the indemnified party that the indemnified party believes it has failed to do so, or (ii) if the indemnified party who is a defendant in any action or proceeding which is also brought against the indemnifying party reasonably shall have concluded that there are legal defenses available to the 5 indemnified party which are not available to the indemnifying party, or (iii) if representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct, the indemnified party shall have the right to assume or continue its own defense as set forth above. In no event shall the indemnifying party be responsible for more than one firm of counsel for all indemnified parties. (d) Non-Exclusive Indemnity. Any indemnity agreements contained herein shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any investigation made or omitted by or on behalf of any indemnified party. (e) Contribution. If for any reason the foregoing indemnity is unavailable, or is insufficient to hold harmless an indemnified party, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities or expenses (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, in such proportion as is appropriate to reflect not only the relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand (taking into consideration the fact that the provision of the registration rights hereunder served as an inducement to the Purchasers to enter into their respective Subscription Agreements) and the indemnified party on the other, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 6. Miscellaneous. (a) Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York without giving effect to the choice of law principles thereof. (b) Entire Agreement; Amendment; Waiver. This Agreement and the Subscription Agreement: (i) contains the entire agreement among the parties hereto with respect to the subject matter hereof, (ii) supersedes all prior written agreements and negotiations and oral understandings, if any, with respect thereto, and (iii) may not be amended or supplemented except by an instrument or counterparts thereof in writing signed by the Company and each of the Purchasers. No waiver of any term or provision of this Agreement shall be effective unless in writing signed by the party to be charged. The waiver by any party of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach. (c) Binding Effect. This Agreement shall be binding on and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns; provided, however, that no party hereto may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the other parties hereto. 6 (d) Notices. All notices, requests, consents and other communications to any party hereunder shall be in writing and shall be given either by personal service, certified mail, return receipt requested, overnight courier or telecopy, addressed as follows: if to the Company, to: Wire One Technologies, Inc. 225 Long Avenue Hillside, NJ 07205 Attn: General Counsel Facsimile No.: 973-391-9776 with a copy to: Fulbright & Jaworski L.L.P. 666 Fifth Avenue New York, NY 10103 Attn: Neil Gold, Esq. Facsimile No.: 212-318-3400 if to any Purchaser, to the address set forth on the signature page of the Subscription Agreement executed by such Purchaser, or to such other address as any party may hereafter specify to the other parties hereto by notice sent in accordance with this Section 6(d). Each such notice, request or other communication shall be effective when delivered at the address specified in this Section 6(d). (e) Headings; Execution in Counterparts. The headings and captions contained herein are for convenience of reference only and shall not control or affect the meaning or construction of any provision hereof. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. 7 IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of each of the parties hereto as of the date first above written. Wire One Technologies, Inc. By:____________________________________ Name: Jonathan Birkhahn Title: Executive Vice President Business Affairs and General Counsel PURCHASER By:_____________________________________ Name: Title: