Exhibit B
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY BE OFFERED, SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION OR THE DELIVERY TO THE COMPANY
OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
DISPOSITION WILL NOT REQUIRE REGISTRATION OF SUCH WARRANT OR SECURITIES ISSUABLE
UPON EXERCISE THEREOF UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE HOLDER
OF THIS WARRANT MAY NOT SELL, OFFER, CONTRACT TO SELL, PLEDGE, GRANT ANY OPTION
TO PURCHASE OR OTHERWISE DISPOSE OF THIS WARRANT NOR ANY OF THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF PRIOR TO THE 90TH DAY AFTER THE DATE OF ISSUANCE
OF THIS WARRANT.
No. W - __ Warrant to Purchase ______ Shares of
Common Stock (subject to adjustment)
CLASS B WARRANT TO PURCHASE COMMON STOCK
of
WIRE ONE TECHNOLOGIES, INC.
THIS CERTIFIES that, for value received, _____________________________, and
its successors and assigns (the "Holder"), is entitled to subscribe for and
purchase from Wire One Technologies, Inc., a Delaware corporation (the
"Company"), upon the terms and conditions set forth herein, ______ shares of the
Company's common stock, $.0001 par value per share ("Common Stock"), at a
purchase price of $7.50 per share (the "Exercise Price") as adjusted from time
to time pursuant to Section 7 hereof. The Holder shall be entitled to exercise
this Warrant at any time or from time to time after June 1, 2002 (or such later
date that the Holder hereof is subject to the indemnification obligations
described in Section 9) until 5:00 P.M., New York time, on June 1, 2006. If this
Warrant is not exercised by the Holder by that time, then this Warrant shall
expire. As used herein, the term "this Warrant" shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
partial exercise of this Warrant.
1. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are exercisable by
the Holder, in whole or in part, at any time, or from time to time, during
the term hereof, by the surrender of this Warrant at the office of the
Company (or such other office or agency of the Company as it may designate
by notice in writing to the Holder) along with either:
(i) a Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder (checking the first box under
paragraph (1) of such Notice of Exercise), and payment in cash, by
wire transfer or by check in an amount equal to the Exercise Price
multiplied by the number of shares of Common Stock being purchased; or
(ii) a Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder (checking the second box under
paragraph (1) of such Notice of Exercise), in the event that the
Holder wishes to exercise ("Cashless Exercise") this Warrant without
payment of the Exercise Price; provided, however, that the Holder may
elect Cashless Exercise only after one year from the date of original
issuance of this Warrant and only if a registration statement with
respect to the shares of Common Stock issuable upon the exercise of
this Warrant is not then in effect. The presentation and surrender of
this Warrant and a Notice of Exercise so completed shall be deemed a
waiver of the Holder's obligation to pay all or any portion of the
Exercise Price in respect of the number of shares of Common Stock
indicated in such Notice of Exercise. In the event of a Cashless
Exercise, the Holder shall exchange its Warrant for that number of
shares of Common Stock determined by multiplying the number of shares
of Common Stock being exercised by a fraction, the numerator of which
shall be the excess, if any, of the then current market price per
share of Common Stock over the Exercise Price, and the denominator of
which shall be the then current market price per share of Common
Stock. For purposes of any computation under this Section 1(a)(ii),
the then current market price per share of Common Stock at any date
shall be deemed to be the average for the five consecutive trading
days immediately prior to the Cashless Exercise of the daily closing
prices of Common Stock as reported by the Nasdaq National Market, or
if not then listed on the Nasdaq National Market, the average of the
highest reported bid and lowest reported asked prices as reported by
the National Association of Securities Dealers, Inc. Automated
Quotations System or if not then publicly traded, the fair market
price per share of Common Stock as determined by the Board of
Directors of the Company.
(b) This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the shares of Common
Stock issuable upon such exercise shall be treated for all purposes as the
holder of record of such shares as of the close of business on such date.
As promptly as practicable on or after such date and in any event within
ten (10) days thereafter, the Company, at its expense, shall issue and
deliver to the person or persons entitled to receive the same, a
certificate or certificates for the number of full shares issuable upon
such exercise.
(c) In the event that this Warrant is exercised in part, the Company,
at its expense, will execute and deliver a new Warrant of like tenor
exercisable for the number of shares for which this Warrant may then be
exercised.
2. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
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3. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and substance to the Company or, in
the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at its expense, shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor and amount.
4. Rights of Stockholders. Subject to Section 7 this Warrant, the Holder
shall not have, solely on account of its status as a holder of this Warrant, any
rights of a stockholder of the Company, either in law or in equity, or to any
notice of meetings of stockholders or of any other proceeding of the Company,
except as provided in this Warrant.
5. Compliance with Securities Laws.
(a) The Holder, by acceptance hereof, acknowledges that this Warrant
is being acquired solely for the Holder's own account, and not as a nominee
for any other party, and for investment purposes only, and that the Holder
will not offer, sell or otherwise dispose of this Warrant or any shares of
Common Stock to be issued upon exercise hereof except under circumstances
that will not result in a violation of the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities laws. Upon exercise
of this Warrant, the Holder shall, if requested by the Company and if the
shares of Common Stock to be issued upon exercise hereof are not
registered, confirm in writing, in a form reasonably satisfactory to the
Company, that the shares of Common Stock 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.
(b) The Holder represents and warrants to the Company that it is an
"accredited investor" as such term is defined in Rule 501(a) of Regulation
D promulgated under the Securities Act, or has entered into a purchaser
representative agreement with a "purchaser representative" as such term is
defined in Rule 501(h) of Regulation D promulgated under the Securities
Act.
(c) This Warrant, and any Warrant issued pursuant to Section 1(c) or
Section 3 of this Warrant, shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by
state securities laws); provided, however, that in any Warrant issued
pursuant to Section 1(c) or Section 3, the third sentence shall be modified
to refer to the original date of issuance of this Warrant:
"NEITHER THIS WARRANT NOR ANY OF THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. NEITHER
THIS WARRANT NOR THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF MAY BE OFFERED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION
OR THE DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH DISPOSITION WILL NOT REQUIRE
REGISTRATION OF SUCH WARRANT OR SECURITIES
ISSUABLE UPON EXERCISE THEREOF UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE HOLDER OF
THIS WARRANT MAY NOT SELL, OFFER, CONTRACT TO
SELL, PLEDGE, GRANT ANY OPTION TO PURCHASE OR
OTHERWISE DISPOSE OF THIS WARRANT NOR ANY OF THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF PRIOR TO
THE 90TH DAY AFTER THE DATE OF ISSUANCE OF THIS
WARRANT."
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(d) All shares of Common Stock issued upon exercise hereof shall be
stamped or imprinted with a legend, if appropriate, in substantially the
following form (in addition to any legend required by state securities
laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF WITHOUT SUCH REGISTRATION
OR THE DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH DISPOSITION WILL NOT REQUIRE
REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED."
6. Reservation of Stock. The Company covenants that during the term this
Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of this Warrant and, from time to time, will
take all steps necessary to amend its Certificate of Incorporation to provide
sufficient reserves of shares of Common Stock issuable upon exercise of the
Warrant. The Company further covenants that all shares of Common Stock that may
be issued upon the exercise of this Warrant will be free from all taxes, liens
and charges in respect of the issue thereof (other than taxes in respect of any
transfer by the Holder occurring contemporaneously). The Company agrees that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the exercise of this
Warrant.
7. Adjustments. The Exercise Price and the number of shares of Common Stock
purchasable hereunder are subject to adjustment from time to time as follows:
7.1 Merger, Sale of Assets, Etc. If at any time while this Warrant, or
any portion hereof, is outstanding and unexpired, there shall be: (i) a
reclassification, reorganization (other than a combination, exchange or
subdivision of shares otherwise provided for herein); (ii) a merger or
consolidation of the Company with or into another entity in which the Company is
not the surviving entity, or a reverse triangular merger in which the Company is
the surviving entity but the shares of the Company's capital stock outstanding
immediately prior to the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash, or otherwise; (iii) a sale or
transfer of the Company's properties and assets as, or substantially as, an
entirety to any other person; or (iv) sale by the Company's shareholders of 50%
or more of the Company's outstanding securities in one or more related
transactions then, as a part of such reclassification, reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
Holder shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Exercise Price then
in effect, the number of shares of stock or other securities or property
resulting from such reclassification, reorganization, merger, consolidation,
sale or transfer that a holder of the shares deliverable upon exercise of this
Warrant would have been entitled to receive in such reclassification,
reorganization, consolidation, merger, sale or transfer if this Warrant had been
exercised immediately before such reclassification, reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 7. The foregoing provisions of this Section 7.1 shall similarly
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apply to successive reclassifications, reorganizations, consolidations, mergers,
sales and transfers and to the stock or securities of any other corporation that
are at the time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.
7.2 Dilutive Issuances.
(a) Except as provided in Section 7.2(c), if the Company at any time
while this Warrant, or any portion thereof, remains outstanding and
unexpired shall issue or sell any shares of Common Stock for a
consideration per share less than the Exercise Price on the date of such
issuance or sale, the Exercise Price shall be adjusted as of the date of
such issuance or sale so that the same shall equal the price determined by
dividing (i) the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such issuance or sale multiplied by the
Exercise Price plus (B) the consideration received by the Company upon such
issuance and sale by (ii) the total number of shares of Common Stock
outstanding after such issuance or sale.
(b) Except as provided in Section 7.2(c), if the Company at any time
while this Warrant, or any portion thereof, remains outstanding and
unexpired shall issue or sell any rights, options, warrants or securities
convertible into Common Stock entitling the holders thereof to purchase
Common Stock or to convert such securities into Common Stock at a price per
share (determined by dividing (i) the total amount, if any, received or
receivable by the Company in consideration of the issuance or sale of such
rights, options, warrants or convertible securities plus the total
consideration, if any, payable to the Company upon exercise or conversion
thereof (the "Total Consideration") by (ii) the number of additional shares
of Common Stock issuable upon exercise or conversion of such securities)
less than the then current Exercise Price in effect on the date of such
issuance or sale, the Exercise Price shall be adjusted as of the date of
such issuance or sale so that the same shall equal the price determined by
dividing (i) the sum of (A) the number of shares of Common Stock
outstanding on the date of such issuance or sale multiplied by the Exercise
Price plus (B) the Total Consideration by (ii) the number of shares of
Common Stock outstanding on the date of such issuance or sale plus the
maximum number of additional shares of Common Stock issuable upon exercise
or conversion of such securities.
(c) No adjustment in the Exercise Price shall be required in the case
of (i) issuances of shares of Common Stock pursuant to the exercise or
conversion of options, warrants or shares of convertible securities that
are outstanding as of the date of this Warrant in accordance with such
securities' current exercise or conversion terms, (ii) the issuance of
employee stock options after the date hereof and the issuance of any shares
of Common Stock upon the exercise thereof, (iii) the issuance of shares of
Common Stock or options, warrants or other convertible securities in
connection with an underwritten public offering or (iv) the issuance of
shares of Common Stock or options, warrants or other convertible securities
in connection with the acquisition of a business or assets by the Company.
The number of shares of Common Stock set forth in this Section 7.2(c) are
subject to adjustment in accordance with any anti-dilution provisions
existing on the date hereof under the terms of the instruments governing
their issuance.
5
7.3 Split, Subdivision or Combination of Shares. If the Company at any time
while this Warrant, or any portion hereof, remains outstanding and unexpired
shall split, subdivide or combine the securities as to which purchase rights
under this Warrant exist, into a different number of securities of the same
class, the Exercise Price for such securities shall be proportionately decreased
in the case of a split or subdivision or proportionately increased in the case
of a combination and the number of shares issuable upon exercise of this Warrant
shall be proportionately increased in the case of a split or subdivision or
proportionately decreased in the case of a combination.
7.4 Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment pursuant to this Section 7, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Holder of this Warrant a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of any such Holder, furnish or cause to be furnished to
such Holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Warrant.
7.5 Notice of Record Dates. The Company shall provide the Holder with at
least 20 calendar days prior written notice of the date on which any of the
events described in Sections 7.1 through 7.3, inclusive, shall take place, or of
the record date if one will be set for any such event or for any proposed
dividend or distribution by the Company. Such notice shall describe the material
terms and conditions of the impending event. The Company shall provide the
Holder with such other information about the event as the Holder shall
reasonably request.
7.6 No Impairment. The Company will not, by any voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 7 and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Warrant against impairment.
7.7 Share Adjustment.
(a) Upon each adjustment of the Exercise Price under this Section 7,
the Holder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares obtained by
multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment, and dividing the product thereof by the Exercise
Price resulting from such adjustment.
(b) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least $0.05 per
share of Common Stock; provided, however, that any adjustments which by
reason of this Section 7.7(b) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 7 shall be made to the nearest cent or to
the nearest 1/l00th of a share, as the case may be.
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8. Registration Rights; Lock-Up. The Holder shall have and be entitled to
the registration rights, and be subject to the obligations, as set forth in
Section 14.8 of the Asset Purchase Agreement, made as of May 30, 2001, by and
among the Company, GeoVideo Networks, Inc., a Delaware corporation, Thomas
Weisel Capital Partners LLC, a Delaware limited liability company, Crest
Communications Partners LP, a Delaware limited partnership, East River Ventures
II L.P., a Delaware limited partnership, and Lucent Technologies, Inc., a
Delaware corporation (the "Asset Purchase Agreement"). By its receipt of this
Warrant, Holder acknowledges that it has received a copy of the Asset Purchase
Agreement and Holder and each of its assignees agrees to be bound by the
provisions of the Asset Purchase Agreement applicable to it, including, without
limitation, the lock-up provision set forth in Section 14.6 of such Asset
Purchase Agreement. Copies of the Asset Purchase Agreement may be obtained at no
cost by written request made by the Holder of record hereof to the Company at
the address set forth in Section 10.
9. Indemnification. The Holder acknowledges and agrees that the number of
Shares of Common Stock issuable under this Warrant may be reduced to the extent
of any indemnification obligation owed to the Company by the Holder pursuant to
the indemnification provisions set forth in Sections 10, 12 and 13 of the Asset
Purchase Agreement. If an indemnification claim has been asserted by the Company
under the Asset Purchase Agreement and has not yet been resolved prior to June
1, 2002, this Warrant shall not be exercisable until such claim has been
resolved.
10. Notice. Any notice, request or demand required or permitted to be given
under this Warrant shall be in writing and shall be effective when (i) delivered
personally, (ii) when mailed, first class, postage prepaid, registered mail,
return receipt requested, or (iii) delivered by courier as follows:
(a) If to the Company to:
Wire One Technologies, Inc.
225 Long Avenue
Hillside, New Jersey 07205
Facsimile: (973) 282-2033
Attention: Jonathan Birkhahn, Esq.
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Facsimile: (212) 318-3400
Attention: Neil Gold, Esq.
(b) If to the Holder to:
with a copy to:
or at such other address as the Company or the Holder shall specify by notice to
the other party hereto.
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11. Amendments. This Warrant and any term hereof may not be amended,
modified, supplemented or terminated, and waivers or consents to departures from
the provisions hereof may not be given, except by written instrument duly
executed by any and all effected parties.
12. Headings and Entire Agreement. The section and subsection headings do
not constitute any part of this Warrant and are inserted herein for convenience
of reference only. This Warrant and the Asset Purchase Agreement embody the
entire agreement between the parties with respect to the subject matter hereof
and thereof and supersede and preempt all prior oral and written understandings
and agreements with respect to the subject matter hereof and thereof, and may
not be amended, modified or changed orally, but only in writing signed by the
party against whom enforcement of any amendment, modification, change, waiver,
extension or discharge is sought.
13. Governing Law. This Warrant is to be governed by and interpreted under
the laws of the State of New York, without giving effect to the principles of
conflicts of laws thereof.
14. Jurisdiction. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Warrant shall be brought exclusively in a New York State or United States
Federal court sitting in New York County, and each of the parties hereby
expressly submits to such jurisdiction and venue of such court (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officers thereunto duly authorized.
Dated: ____________, 2001
WIRE ONE TECHNOLOGIES, INC.
By:
----------------------------------
Name:
Title:
9
NOTICE OF EXERCISE
To: Wire One Technologies, Inc.
(1) (Check one box below)
[_] The undersigned hereby elects to purchase ____ shares of Common
Stock of Wire One Technologies, Inc., pursuant to the provisions
of the attached Warrant, and tenders herewith payment of the
purchase price for such shares in full; or
[_] The undersigned hereby elects to surrender _____ shares
purchasable under this Warrant for such shares of Common Stock
issuable in exchange therefor pursuant to the Cashless Exercise
provisions of the within Warrant, as provided for in Section
1(a)(ii) of such Warrant.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that, unless registered, the shares of Common Stock to be issued
upon exercise thereof are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and for investment
purposes only, and that the undersigned will not offer, sell or otherwise
dispose of any such shares of Common Stock except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended (the
"Securities Act"), or any applicable state securities laws. The undersigned
further confirms and acknowledges that (check one box below):
[_] it is an "accredited investor" as such term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act; or
[_] it has entered into a purchaser representative agreement with a
"purchaser representative" as such term is defined in Rule 501(h)
of Regulation D promulgated under the Securities Act.
(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------
(Name)
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
---------------------------------
(Name)
- ------------------------------
Name:
Date: