SUBSCRIPTION AGREEMENT
dated as of August __, 2001
by and among
WIRE ONE TECHNOLOGIES, INC.
and
THE PURCHASER NAMED HEREIN
TABLE OF CONTENTS
Page
No.
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ARTICLE I .......................................................1
PURCHASE AND SALE OF COMMON SHARES AND WARRANTS..........................1
1.01 Subscription...........................................1
1.02 Purchase Price; Escrow.................................1
1.03 Closing; Termination...................................1
1.04 Restrictive Legend.....................................2
1.05 Use of Proceeds........................................2
1.06 Opinion of Counsel.....................................2
ARTICLE II .......................................................2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................2
2.01 Organization and Qualification.........................3
2.02 Authority..............................................3
2.03 Capital Stock..........................................3
2.04 No Conflicts; Approvals and Consents...................4
2.05 SEC Reports and Financial Statements...................5
2.06 Absence of Certain Changes or Events...................5
2.07 Legal Proceedings......................................5
2.08 Compliance with Laws and Orders........................6
2.09 Compliance with Agreements; Certain Agreements.........6
2.10 Affiliate Transactions.................................6
2.11 Real Property Holding Company..........................6
ARTICLE III .......................................................7
REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................7
3.01 Organization...........................................7
3.02 Authority..............................................7
3.03 No Conflicts; Approvals and Consents...................7
3.04 Legal Proceedings......................................8
3.05 Purchase of Shares.....................................8
3.06 Accredited Investor Status.............................9
ARTICLE IV .......................................................9
DEFINITIONS .......................................................9
4.01 Definitions............................................9
ARTICLE V ......................................................11
MISCELLANEOUS ......................................................11
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5.01 Survival of Representations, Warranties,
Covenants and Agreements............................11
5.02 Notices...............................................11
5.03 Entire Agreement......................................12
5.04 Expenses..............................................12
5.05 Public Announcements..................................12
5.06 Waiver................................................12
5.07 Amendment.............................................13
5.08 No Third Party Beneficiary............................13
5.09 No Assignment; Binding Effect.........................13
5.10 Headings..............................................13
5.11 Governing Law.........................................13
5.12 Arbitration...........................................13
5.13 Counterparts..........................................14
Exhibit A Instructions for Payment of Purchase Price
Exhibit B Form of Notice of Effectiveness of
Registration Statement
Exhibit C Accredited Investor Certification
Exhibit D Legal Opinion
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This SUBSCRIPTION AGREEMENT dated as of August __, 2001 is
made and entered into by and between Wire One Technologies, Inc., a Delaware
corporation (the "Company") and the investor listed on the signature page hereto
("Purchaser"). Capitalized terms not otherwise defined herein have the meanings
set forth in Section 4.01.
WHEREAS, the Company intends to sell, in an offering exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws (the
"Offering") (i) shares of its common stock, par value $.0001 per share (the
"Common Stock") and (ii) warrants to purchase its Common Stock (the "Warrants");
WHEREAS, the Offering commenced on July 17, 2001 and will
terminate at 5:00 p.m., Eastern Standard Time, on August 15, 2001 (the
"Termination Date") (unless such Termination Date is extended as described in
Section 1.03 hereof); and
WHEREAS, the Company desires to sell to Purchaser, and
Purchaser desires to subscribe to purchase, that number of shares of Common
Stock and Warrants, set forth next to Purchaser's name on the signature page
hereto, on the terms and subject to the conditions set forth in this Agreement.
The shares of Common Stock being subscribed for by Purchaser hereunder are
hereinafter referred to as the "Common Shares" and the shares of Common Stock
issuable upon exercise of the Warrants being subscribed for by Purchaser
hereunder are hereinafter referred to as the "Warrant Shares".
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON SHARES AND WARRANTS
1.01 Subscription. Purchaser hereby subscribes to purchase
from the Company, at the Closing (as hereinafter defined), the number of shares
of Common Stock and Warrants set forth next to Purchaser's name on the signature
page hereto, on the terms and subject to the conditions set forth in this
Agreement.
1.02 Purchase Price; Escrow. The aggregate purchase price
for the Common Shares and the Warrants subscribed for by Purchaser is $________
(the "Purchase Price"). On the date hereof, Purchaser shall pay the Purchase
Price in accordance with the directions set forth in Exhibit A. The Company and
X.X. Xxxxxxxxxx & Co., Inc. (the "Placement Agent") have entered into an Escrow
Agreement, dated as of July 30, 2001, with Fulbright & Xxxxxxxx L.L.P., as
escrow agent (the "Escrow Agent"). Pursuant to the Escrow Agreement, the
Purchase Price received from Purchaser, and the purchase price received from any
other purchaser in the Offering, shall be deposited, pending the Closing or
termination of the Offering, into an escrow account (the "Escrow Account"). The
Escrow Account shall not bear interest.
1.03 Closing; Termination. An initial closing of the
Offering may occur, and subsequent closings may occur from time to time
thereafter, at such times as the Company may determine, which shall in no event
be later than the Termination Date. The Company and the Placement Agent, may,
upon written notice to the Escrow Agent and Purchaser, extend the term of the
Offering for a period of up to 15 days from and after August 15, 2001 (whereupon
the term "Termination Date" shall refer to the final date of such extended term
of the Offering). The Company shall provide prior written notice to Purchaser of
the date (the "Closing Date") on which the closing (the "Closing") with respect
to the purchase and sale of the Common Shares and Warrants subscribed for by
Purchaser hereunder will occur. The Closing will take place at the offices of
Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M.
local time, on the Closing Date. At the Closing, the Escrow Agent will release
to the Company the Purchase Price and the Company will deliver to Purchaser a
certificate or certificates representing the number of Warrants purchased by
Purchaser (the "Warrant Certificates"). At or promptly after the Closing, the
Company will deliver to Purchaser a certificate or certificates representing the
Common Shares purchased by Purchaser (the "Share Certificates"). The terms of
this Agreement shall be the same as the terms of any other Subscription
Agreements entered into and delivered by other purchasers in connection with the
Offering. The Company may terminate the Offering prior to the Termination Date
upon written notice to the Escrow Agent and Purchaser. If the Company terminates
the Offering, the Escrow Agent will promptly return the Purchase Price to
Purchaser without interest, deduction, penalty or expense.
1.04 Restrictive Legend. Each Share Certificate and each
Warrant Certificate issued by the Company will bear a legend in the following
terms:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE OR FOREIGN SECURITIES LAWS, AND ACCORDINGLY, SUCH SECURITIES MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE
WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL, STATE AND FOREIGN SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM."
All of the restrictions imposed by this Section 1.04 upon the transferability of
the Common Shares, Warrants and Warrant Shares shall cease and terminate as to
any particular Common Share, Warrant or Warrant Share when such Common Shares or
Warrant Shares shall have been effectively registered under the Securities Act
and applicable state securities laws and sold by the holder thereof in
accordance with such registration or sold under and pursuant to Rule 144 or is
eligible to be sold under and pursuant to paragraph (k) of Rule 144. Whenever
the restrictions imposed by this Section 1.04 shall terminate as to any Common
Share, Warrant or Warrant Share as hereinabove provided, the holder thereof
shall be entitled to receive from the Company, without expense, a new
certificate evidencing such Common Share, Warrant or Warrant Share not bearing
the restrictive legend otherwise required to be borne by a certificate
evidencing such Common Share, Warrant or Warrant Share; provided that the
Company may require an opinion of counsel reasonably satisfactory to it to the
effect that no legend is required under the Securities Act and applicable state
securities laws or foreign securities laws.
1.05 Use of Proceeds. The Company shall use the net
proceeds received from the sale of the Common Shares and the Warrants for
general corporate purposes.
1.06 Opinion of Counsel. Purchaser shall receive an
opinion, substantially in the form attached hereto as Exhibit D, from Fulbright
& Xxxxxxxx L.L.P., counsel to the Company, dated as of the Closing Date.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as
follows:
2.01 Organization and Qualification. Each of the Company
and its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the Laws of its jurisdiction of incorporation, and has all
requisite corporate power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its Assets and Properties, except
for such failures to be in good standing or to have such power and authority
which, individually or in the aggregate, are not having a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole. Each of the Company
and its Subsidiaries is duly qualified, licensed or admitted to do business and
is in good standing in each jurisdiction in which the ownership, use or leasing
of its Assets and Properties, or the conduct or nature of its business, makes
such qualification, licensing or admission necessary, except for such failures
to be so qualified, licensed or admitted and in good standing which,
individually or in the aggregate, are not having a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole. Except for interests in the
Subsidiaries of the Company and as disclosed in the Company SEC Reports (as
defined below) filed prior to the date of this Agreement, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity. The Company has previously delivered to Purchaser correct
and complete copies of the certificate or articles of incorporation and bylaws
(or other comparable charter documents) of the Company and each of its material
Subsidiaries.
2.02 Authority. The Company has the requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of the Company. No other
corporate proceedings on the part of the Company or its stockholders are
necessary to authorize the execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and constitutes the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar Laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at Law). The Common
Shares, when issued in accordance with this Agreement, and the Warrant Shares,
when issued upon exercise of the Warrants, will be duly authorized, validly
issued, fully paid and non-assessable.
2.03 Capital Stock. (a) The authorized capital stock of
the Company consists solely of 100,000,000 shares of Common Stock and 5,000,000
shares of preferred stock, par value $0.0001 per share ("Preferred Stock"). As
of July 30, 2001, (i) 21,501,186 shares of Common Stock were issued and
outstanding (excluding 39,891 shares held in treasury), (ii) 2,683,938 shares
were reserved for issuance upon the exercise of outstanding warrants, (iii)
5,401,290 shares were reserved for issuance under the Company's stock option
plans, of which options to purchase 4,664,739 shares were outstanding, and (iv)
2,505,991 shares were reserved for issuance upon the exercise of other options.
Except as set forth in Section 2.03(a) of the Company Disclosure Schedule, since
such date, there has been no change in the number of issued and outstanding
shares of Common Stock. As of the date hereof, no shares of Preferred Stock are
issued and outstanding. All of the issued and outstanding shares of Common Stock
and all shares of Common Stock reserved for issuance will be, upon issuance in
accordance with the terms specified in the instruments or agreements pursuant to
which they are issuable, duly authorized, validly issued, fully paid and
nonassessable. Except pursuant to this Agreement, pursuant to other Subscription
Agreements entered into in connection with the Offering, as disclosed in the
Company SEC Reports (as defined below) filed prior to the date of this Agreement
or as set forth in Section 2.03(a) of the Company Disclosure Schedule, there are
no outstanding subscriptions, options, warrants, rights (including "phantom"
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stock rights), preemptive rights or other contracts, commitments, understandings
or arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"), obligating
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock of the Company or of any Subsidiary or to grant, extend or enter into any
Option with respect thereto.
(b) All of the outstanding shares of capital stock of
each Subsidiary of the Company are duly authorized, validly issued, fully paid
and nonassessable and are owned, beneficially and of record, by the Company or a
Subsidiary wholly owned, directly or indirectly, by the Company, free and clear
of any Liens. Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement or as set forth in Section 2.03(a) of the Company
Disclosure Schedule, there are no (i) outstanding Options obligating the Company
or any of its Subsidiaries to issue or sell any shares of capital stock of any
Subsidiary of the Company or to grant, extend or enter into any such Option or
(ii) voting trusts, proxies or other commitments, understandings, restrictions
or arrangements in favor of any person other than the Company or a Subsidiary
wholly owned, directly or indirectly, by the Company with respect to the voting
of or the right to participate in dividends or other earnings on any capital
stock of any Subsidiary of the Company.
(c) There are no outstanding contractual obligations of
the Company or any Subsidiary of the Company to repurchase, redeem or otherwise
acquire any shares of Common Stock or any capital stock of any Subsidiary of the
Company or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary of the Company or any
other person.
2.04 No Conflicts; Approvals and Consents. The execution
and delivery by the Company of this Agreement, and the performance by the
Company of its obligations hereunder and the consummation of the transactions
contemplated hereby, will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the certificate of incorporation
or by-laws (or other comparable corporate charter document) of the Company;
(b) conflict with or result in a violation or breach of
any terms or provision of any Law or Order applicable to the Company or its
Assets and Properties (other than such conflicts, violations or breaches which
do not in the aggregate have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated hereby);
(c) except as do not, individually or in the aggregate,
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole or on the ability of the Company to consummate the transactions
contemplated hereby, (i) conflict with or result in a violation or breach of,
(ii) constitute (with or without notice or lapse of time or both) a default
under, (iii) require the Company to obtain any consent, approval or action of,
make any filing with or give any notice to any Person as a result or under the
terms of, or (iv) result in the creation or imposition of any Lien upon the
Company or any of its Assets or Properties under, any contract or License to
which the Company is a party or by which any of its Assets and Properties is
bound;
(d) no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental or Regulatory Authority or
any contract to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective Assets
4
or Properties is bound for the execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder or the
consummation of the transactions contemplated hereby, other than such consents,
approvals, actions, filings and notices which the failure to make or obtain, as
the case may be, individually or in the aggregate, do not have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole or on the
ability of the Company to consummate the transactions contemplated hereby.
2.05 SEC Reports and Financial Statements. The Company has
delivered to Purchaser, prior to the execution of this Agreement, a true and
complete copy of each form, report, schedule, registration statement, definitive
proxy statement and other document (together with all amendments thereof and
supplements thereto) filed by the Company or any of its Subsidiaries with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act"), and the Securities Act and the rules and regulations thereunder
since March 15, 2001 (as such documents have since the time of their filing been
amended or supplemented, the "Company SEC Reports"), which are all the documents
(other than preliminary material) that the Company and its Subsidiaries were
required to file with the SEC since such date. As of their respective dates, the
Company SEC Reports (i) complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not contain any untrue statement of a material fact or omit 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. The audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each case, the notes,
if any, thereto) included in the Company SEC Reports (the "Company Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with GAAP, except as may be indicated therein or in the notes thereto
and except with respect to unaudited statements as permitted by Form 10-Q of the
SEC, and, as of the respective dates thereof, fairly presented (subject, in the
case of the unaudited interim financial statements, to year-end audit
adjustments) the consolidated financial position of the Company and its
consolidated subsidiaries as at the respective dates thereof and the
consolidated results of their operations and cash flows for the respective
periods then ended. The Common Stock has been registered under the Exchange Act
for at least 12 months, and the Company has timely filed all required reports
under the Exchange Act during such period.
2.06 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date of this Agreement
or in Section 2.06 of the Company Disclosure Schedule, (a) since April 1, 2001,
there has not been any change, event or development having, individually or in
the aggregate, a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole, and (b) between April 1, 2001 and the date hereof, the Company
and its Subsidiaries have conducted their respective businesses only in the
ordinary course consistent with past practice.
2.07 Legal Proceedings. Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement or in Section 2.07 of the
Company Disclosure Schedule, (i) there are no Actions or Proceedings pending or,
to the Knowledge of the Company, threatened against, relating to or affecting,
nor to the Knowledge of the Company are there any Governmental or Regulatory
Authority investigations or audits pending or threatened against, relating to or
affecting, the Company or any of its Subsidiaries or any of their respective
Assets and Properties which, individually or in the aggregate, have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole or on the
ability of the Company to consummate the transactions contemplated hereby, and
(ii) neither the Company nor any of its Subsidiaries is subject to any
continuing Order of any Governmental or Regulatory Authority which, individually
or in the aggregate, have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
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2.08 Compliance with Laws and Orders. The Company and its
Subsidiaries hold all Licenses for the lawful conduct of their respective
businesses, except for failures to hold such Licenses which, individually or in
the aggregate, are not having a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole. The Company and its Subsidiaries are in
compliance with the terms of such Licenses, except failures so to comply which,
individually or in the aggregate, are not having a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, the Company and
its Subsidiaries are not in violation of or default under any Law or Order of
any Governmental or Regulatory Authority, except for such violations or defaults
which, individually or in the aggregate, are not having a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
2.09 Compliance with Agreements; Certain Agreements. (a)
Except as disclosed in the Company SEC Reports filed prior to the date of this
Agreement, neither the Company nor any of its Subsidiaries nor, to the knowledge
of the Company, any other party thereto is in breach or violation of, or in
default in the performance or observance of any term or provision of, and no
event has occurred which, with notice or lapse of time or both, could be
reasonably expected to result in a default under, (i) the certificate of
incorporation or bylaws (or other comparable charter documents) of the Company
or any of its Subsidiaries or (ii) any contract to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective assets or properties is bound, except in the case of
clause (ii) for breaches, violations and defaults which, individually or in the
aggregate, do not have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole.
(b) Except as disclosed in Section 2.09(b) of the Company
Disclosure Schedule or in the Company SEC Reports filed prior to the date of
this Agreement or as provided for in this Agreement, as of the date hereof,
neither the Company nor any of its Subsidiaries is a party to any oral or
written (i) consulting agreement not terminable on thirty (30) days' or less
notice, (ii) union or collective bargaining agreement, (iii) agreement with any
executive officer or other key employee of the Company or any of its
Subsidiaries the benefits of which are contingent or vest, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company or any of its Subsidiaries of the nature contemplated by this Agreement,
(iv) agreement with respect to any executive officer or other key employee of
the Company or any of its Subsidiaries providing any term of employment or
compensation guarantee, or (v) agreement or plan, including any stock option,
stock appreciation right, restricted stock or stock purchase plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
2.10 Affiliate Transactions. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, no officer,
director or shareholder of the Company has any interest (other than as a
shareholder of the Company) in any property, real or personal, tangible or
intangible, including without limitation intellectual property, used in or
pertaining to the business of the Company.
2.11 Real Property Holding Company. The Company has not
filed a consent under Section 341(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), and has no present plan or intention to file such a
consent, and (b) the Company has not been a "United States real property holding
corporation" (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code, has no present plan or
intention to become a United States real property holding corporation, and will
provide such information as is reasonably necessary to enable the Purchaser to
establish that the Company has not been a United States real property holding
corporation during such applicable period.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as to
himself or itself as follows:
3.01 Organization. To the extent Purchaser is an entity,
Purchaser is duly organized, validly existing and in good standing under the
Laws of its jurisdiction of its organization. Purchaser has the requisite power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
3.02 Authority. To the extent Purchaser is an entity, the
execution, delivery and performance by Purchaser of this Agreement, and the
consummation by Purchaser of the transactions contemplated hereby, have been
duly and validly approved by Purchaser, no other action on the part of Purchaser
or its equityholders being necessary for Purchaser to execute, deliver and
perform its obligations hereunder. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at Law).
3.03 No Conflicts; Approvals and Consents. (a) The
execution and delivery of this Agreement by Purchaser does not, and the
performance by Purchaser of its obligations hereunder and the consummation of
the transactions contemplated hereby will not:
(i) if Purchaser is an entity, conflict with or result in
a violation or breach of any of the terms, conditions or provisions of the
certificate of incorporation, by-laws, limited liability agreement or trust
agreement (or other comparable corporate charter document) of Purchaser;
(ii) conflict with or result in a violation or
breach of any term or provision of any Law or Order applicable to Purchaser or
any of its Assets and Properties; or
(iii) (A) conflict with or result in a violation or breach
of, (B) constitute (with or without notice or lapse of time or both) a default
under, (C) require Purchaser to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the terms
of, or (D) result in the creation or imposition of any Lien upon Purchaser or
any of its Assets or Properties under, any contract or License to which
Purchaser is a party or by which any of its Assets and Properties is bound.
(b) no consent, approval or action of, filing with or notice
to any Governmental or Regulatory Authority on the part of Purchaser is required
in connection with the execution, delivery and performance of Purchaser's
obligations hereunder or the consummation of the transactions contemplated
hereby.
7
3.04 Legal Proceedings. There are no Actions or
Proceedings pending or, to the knowledge of Purchaser, threatened against,
relating to or affecting Purchaser or any of its Assets and Properties which
could reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement.
3.05 Purchase of Shares. (a) Purchaser acknowledges that
this Agreement is made with Purchaser in reliance upon Purchaser's
representation to the Company, which by Purchaser's execution of this Agreement
Purchaser hereby confirms, that the Common Shares and the Warrants (and any
Warrant Shares issued upon exercise of the Warrants) are being acquired by
Purchaser and will be acquired for investment for Purchaser's own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same; provided, however,
that by making the representations herein, Purchaser does not agree to hold the
Common Shares, Warrants or any Warrant Shares for any minimum or other specific
term and reserves the right to dispose of the Common Shares, the Warrants and
Warrant Shares at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act and in accordance with the
applicable provisions of the Registration Rights Agreement and the Warrants. By
executing this Agreement, Purchaser further represents that it does not
presently have any contract, undertaking, agreement or arrangement with any
Person to sell, transfer or grant participations to such Person or to any third
Person, with respect to any of the Common Shares, Warrants or Warrant Shares.
Purchaser represents that either (i) Purchaser has not been formed for the
specific purpose of acquiring the Common Shares, Warrants or Warrant Shares or
(ii) if Purchaser has been formed for the specific purpose of acquiring the
Common Shares, Warrants or Warrant Shares, each Person that has an interest in
Purchaser is an "accredited investor" within the meaning of Rule 501 under the
Securities Act.
(b) Purchaser has had an opportunity to discuss the
Company's business, management, financial affairs and the terms and conditions
of the sale of the Common Shares and Warrants pursuant to this Agreement with
the Company's management. Purchaser acknowledges receipt from the Company of
copies of the Company SEC Reports and such other information about the Company
as Purchaser or its advisors, if any, have requested. Purchaser understands that
such discussions, as well as the Company SEC Reports and other information
requested by Purchaser or its advisors, if any, and received from the Company,
were intended to describe the aspects of the Company's business which it
believes to be material.
(c) Purchaser understands that none of the Common Shares,
Warrants or Warrant Shares have been, and none of them will be, registered under
the Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of Purchaser's
representations and warranties as expressed in this Article III. Purchaser
understands that the Common Shares, Warrants or Warrant Shares are "restricted
securities" under applicable United States federal and state securities laws and
that, pursuant to these laws, Purchaser must hold the Common Shares, Warrants or
Warrant Shares indefinitely unless they are registered with the SEC, or an
exemption from such registration and qualification requirements is available.
Purchaser acknowledges that the Company has no obligation to register or qualify
the Common Shares, Warrants or Warrant Shares for resale except as expressly
provided under the Registration Rights Agreement. Purchaser further acknowledges
that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Common Shares, Warrants or Warrant
Shares, and on requirements relating to the Company which are outside of
Purchaser's control, and which the Company is under no obligation and may not be
able to satisfy.
8
(d) Purchaser has such knowledge and experience in
financial and business matters that Purchaser is capable of evaluating the
merits and risks of the transactions contemplated hereby, including the purchase
of the Common Shares, Warrants and the Warrant Shares.
(e) Purchaser is able to bear the economic risk of
acquiring Common Shares, Warrants and the Warrant Shares and to hold the Common
Shares, Warrants and Warrant Shares acquired by Purchaser pursuant to this
Agreement for an indefinite period of time.
3.06 Accredited Investor Status. Purchaser is an
"accredited investor" within the meaning of Rule 501 under the Securities Act
and represents that the Accredited Investor Certification executed by Purchaser,
the form of which is attached as Exhibit C to this Agreement, is true, correct
and complete.
ARTICLE IV
DEFINITIONS
4.01 Definitions. (a) Defined Terms. As used in this
Agreement, the following defined terms have the meanings indicated below:
"AAA" has the meaning ascribed to it in Section 5.12.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"Affiliate" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise and, in any event and without limitation of the previous sentence, any
Person owning ten percent (10%) or more of the voting securities of another
Person shall be deemed to control that Person.
"Agreement" means this Subscription Agreement and the Company
Disclosure Schedule, as the same shall be amended from time to time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person.
"Board of Arbitration" has the meaning ascribed to it in
Section 5.12.
"Closing" has the meaning ascribed to in Section 1.03.
"Closing Date" has the meaning ascribed to in Section 1.03.
"Common Shares" has the meaning ascribed to it in the forepart
of this Agreement.
"Common Stock" has the meaning ascribed to it in the forepart
of this Agreement.
"Company" has the meaning ascribed to it in the forepart of
this Agreement.
"Company Financial Statements" has the meaning ascribed to it
in Section 2.05.
9
"Company SEC Reports" has the meaning ascribed to it in
Section 2.05.
"Escrow Account" has the meaning ascribed to it in Section
1.02.
"Escrow Agent" has the meaning ascribed to it in Section 1.02.
"Exchange Act" has the meaning ascribed to it in Section 2.05.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"Knowledge of the Company" means the actual knowledge of any
officer or director of the Company or any Subsidiary of the Company.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale contract, title retention contract or other
contract to give any of the foregoing.
"Material Adverse Effect" with respect to an entity means any
event, change or effect which is materially adverse to the business, financial
condition or results of operations of such entity.
"Option" has the meaning ascribed to it in Section 2.03.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"Placement Agent" has the meaning ascribed to it in Section
1.02.
"Preferred Stock" has the meaning ascribed to it in Section
2.03.
"Purchase Price" has the meaning ascribed to it in Section
1.02.
"Purchaser" has the meaning ascribed to it in the forepart of
this Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the date hereof, by and between the Company and Purchaser.
10
"Rule 144" shall mean Rule 144 promulgated by the SEC under
the Securities Act (or any successor or similar rule then in force).
"SEC" has the meaning ascribed to it in Section 2.05.
"Securities Act" has the meaning ascribed to it in the
forepart of this Agreement.
"Share Certificates" has the meaning ascribed to it in Section
1.03.
"Subsidiary" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than
fifty percent (50%) of either the equity interests in, or the voting control of,
such Person.
"Termination Date" has the meaning ascribed to it in the
forepart and Section 1.03 of this Agreement.
"Warrant Certificates" has the meaning ascribed to it in
Section 1.03.
"Warrant Shares" has the meaning ascribed to it in the
forepart of this Agreement.
"Warrants" has the meaning ascribed to it in the forepart of
this Agreement.
(b) Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
the terms "Article" or "Section" refer to the specified Article or Section of
this Agreement; and (v) the phrase "ordinary course of business" refers to the
business of the Company or a Subsidiary. Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless business days
are specified. All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP. Any representation or warranty
contained herein as to the enforceability of a contract shall be subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium or other
similar law affecting the enforcement of creditors' rights generally and to
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at Law).
ARTICLE V
MISCELLANEOUS
5.01 Survival of Representations, Warranties, Covenants
and Agreements. Except for the agreements contained in this Article V, which
shall survive indefinitely, the representations, warranties, covenants and
agreements contained in this Agreement or in any instrument delivered pursuant
to this Agreement shall survive the longer of (i) twelve months from the Closing
Date or (ii) the date the SEC has declared effective the Registration Statement
as contemplated by the Registration Rights Agreement or (iii) the expiration of
the Effectiveness Period as defined in the Registration Rights Agreement.
5.02 Notices. All notices, requests and other
communications hereunder must be in writing and will be deemed to have been duly
given only if delivered personally or by facsimile transmission or mailed (first
11
class postage prepaid) to the parties at the following addresses or facsimile
numbers:
If to the Company, to:
Wire One Technologies, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: General Counsel
with a copy to:
Fulbright & Xxxxxxxx L.L.P
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxxx Xxxx
if to Purchaser, to the address set forth on the signature
page of this Subscription Agreement executed by such
Purchaser.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
5.03 Entire Agreement. Except for the Confidentiality
Agreement between the Company and Purchaser, this Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
5.04 Expenses. Except as otherwise expressly provided in
this Agreement, whether or not the transactions contemplated hereby are
consummated, each party will pay its own costs and expenses incurred in
connection with the negotiation, execution and closing of this Agreement and the
transactions contemplated hereby; provided, however, that the Company shall pay
the fees and expenses, up to a maximum amount of $12,000, of one lead counsel
representing the Purchasers in the Offering.
5.05 Public Announcements. Except as otherwise required by
Law or the rules of any applicable securities exchange or national market
system, so long as this Agreement is in effect, Purchaser and the Company will
not, and will not permit any of their respective representatives to, issue or
cause the publication of any press release or make any other public announcement
with respect to the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably withheld.
Purchaser and the Company will cooperate with each other in the development and
distribution of all press releases and other public announcements with respect
to this Agreement and the transactions contemplated hereby, and will furnish the
other with drafts of any such releases and announcements as far in advance as
practicable.
5.06 Waiver. Any term or condition of this Agreement may
be waived at any time by the party that is entitled to the benefit thereof, but
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no such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
5.07 Amendment. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto.
5.08 No Third Party Beneficiary. The terms and provisions
of this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person.
5.09 No Assignment; Binding Effect. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void, except (a) for assignments and transfers by
operation of Law and (b) that Purchaser may assign any or all of its rights,
interests and obligations hereunder to a wholly-owned subsidiary or other
Affiliate, provided that any such subsidiary or other Affiliate agrees in
writing to be bound by all of the terms, conditions and provisions contained
herein, but no such assignment referred to in clause (b) shall relieve Purchaser
of its obligations hereunder. Subject to the preceding sentence, this Agreement
is binding upon, inures to the benefit of and is enforceable by the parties
hereto and their respective successors and assigns.
5.10 Headings. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.
5.11 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York applicable to
a contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
5.12 Arbitration. The parties to this Agreement agree that
any disputes arising out of, or in connection with, the execution,
interpretation, performance or non-performance of this Agreement (including the
validity, scope and enforceability of this arbitration provision) shall be
settled by arbitration, which shall be conducted in New York, New York pursuant
to the then prevailing rules of the American Arbitration Association ("AAA") by
a panel of three arbitrators of the AAA (the "Board of Arbitration") acceptable
to the Company, on the one hand, and Purchaser, on the other hand. Each of the
Company, on the one hand, and Purchaser, on the other hand, shall select one (1)
member and the third member shall be selected by mutual agreement of the other
members. If the other members fail to reach agreement on a third member within
thirty (30) days after their selection, the parties shall jointly request the
AAA to designate, in accordance with AAA rules, a third member experienced in
industries in which the Company does business. The parties agree to facilitate
the arbitration by (a) making available to one another and to the Board of
Arbitration for inspection and extraction all documents, books, records, and
personnel under their control or under the control of a person controlling or
controlled by such party if determined by the Board of Arbitration to be
relevant to the dispute, (b) conducting arbitration hearings to the greatest
extent possible on successive business days and (c) using their best efforts to
observe the time periods established by the rules of the AAA or by the Board of
Arbitration for the submission of evidence and briefs. The decision of the Board
of Arbitration shall be final, binding and not subject to further review, and
judgment on the award of the Board of Arbitration may be entered in and enforced
by any court having jurisdiction over the parties or their assets. Any costs
incurred in conducting the arbitration shall be borne by the non-prevailing (as
determined by the Board of Arbitration) party.
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5.13 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
14
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
Wire One Technologies, Inc.
By:
-----------------------------------------------
Name: Xxxxxxxx Xxxxxxxx
Title: Executive Vice President
Business Affairs and General Counsel
PURCHASER:
By:
-----------------------------------------------
Name:
Title:
Address:
----------------------------------------
----------------------------------------
Facsimile:
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AGGREGATE SUBSCRIPTION AMOUNT:
Number of Shares of Common Stock:
Number of Warrants:
Aggregate Purchase Price:
