EXHIBIT 4.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR WIRE ONE TECHNOLOGIES, INC. SHALL
HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
WIRE ONE TECHNOLOGIES, INC.
SUBORDINATED CONVERTIBLE PROMISSORY NOTE
U.S. $__________ New York, New York
No.: CN-02-__ December 17, 2002
FOR VALUE RECEIVED, the undersigned, Wire One Technologies, Inc., a
Delaware corporation (the "Company"), hereby promises to pay to the order of
_________________________ or any future permitted holder of this promissory note
(the "Payee"), at the principal office of the Payee set forth herein, or at such
other place as the holder may designate in writing to the Company, the principal
sum of up to ______________________ Dollars (U.S. $__________), or such other
amount as may be outstanding hereunder, together with all accrued but unpaid
interest, in such coin or currency of the United States of America as at the
time shall be legal tender for the payment of public and private debts and in
immediately available funds, as provided in this promissory note (the "Note").
This Note is one of the Notes referred to in the Note and Warrant Purchase
Agreement dated as of December 17, 2002 between the Company and the purchasers
named therein (the "Purchase Agreement"). Concurrently with the issuance of this
Note, the Company is issuing separate notes to separate purchasers pursuant to
the Purchase Agreement (the "Other Notes"). Capitalized terms used and not
otherwise defined herein shall the meanings set forth for such terms in the
Purchase Agreement.
1. Principal and Interest Payments.
(a) The Company shall repay in full the entire principal balance
then outstanding under this Note on the first to occur (the "Maturity Date") of:
(i) the acceleration of the obligations as contemplated by this Note or (ii) the
later of (x) February 2, 2004 and (y) ninety (90) days following the "Maturity
Date" pursuant to and as defined in the Credit Agreement (as defined in Section
1(c) hereof) or the earlier termination thereof. The Company may prepay all or
any part of this Note, in whole or in part at any time, as set forth in Section
12 hereof.
(b) Interest on the outstanding principal balance of this Note shall
accrue at a rate of eight percent (8%) per annum. Interest on the outstanding
principal balance of
the Note shall be computed on the basis of the actual number of days elapsed and
a year of three hundred and sixty (360) days and shall be payable on the last
day of each quarter following the date hereof by the Company. Interest shall be
payable, at the Company's option, in cash or in shares of Common Stock. The
number of shares of Common Stock to be issued as payment of accrued and unpaid
interest shall be determined by dividing (a) the total amount of accrued and
unpaid interest to be converted into Common Stock by (b) the lesser of (i) the
Conversion Price (as defined in Section 2(b) hereof) and (ii) the average
closing price of the Common Stock for the five (5) trading days immediately
preceding the date such interest payment is due. Furthermore, upon the
occurrence of an Event of Default, then to the extent permitted by law, the
Company will pay interest to the Payee, payable on demand, on the outstanding
principal balance of the Note from the date of the Event of Default until
payment in full at the rate of twelve percent (12%) per annum.
(c) All payments due under this Note shall be subordinated and made
junior, in all respects to the payment in full of all principal, all interest
accrued thereon and all other amounts due on any current and future indebtedness
outstanding under the Credit Agreement dated as of May 31, 2002 (the "Credit
Agreement") among the Company, the lenders named therein and J.P. Morgan Chase
Bank (the "Morgan Indebtedness"). Until the Morgan Indebtedness shall have been
paid in full, the Company shall not make, and the Payee shall not receive or
retain, any payment in respect of principal or interest on this Note, except
that the Company may pay interest on this Note in shares of Common Stock. The
Company shall not make any cash payments to the Payee under this Note without
the prior written consent of J.P. Morgan Chase Bank. This Note shall be senior
to all other indebtedness of the Company other than the Morgan Indebtedness.
2. Conversion.
(a) At any time on or after the date hereof, this Note shall be
convertible (in whole or in part), at the option of the Payee (the "Conversion
Option"), into such number of fully paid and non-assessable shares of Common
Stock (the "Conversion Rate") as is determined by dividing (x) that portion of
the outstanding principal balance under this Note as of such date that the Payee
elects to convert by (y) the Conversion Price (as defined below) then in effect
on the date on which the Payee faxes a notice of conversion (the "Conversion
Notice"), duly executed, to the Company (facsimile number (973) 391-9776, Attn.:
Chief Financial Officer) (the "Voluntary Conversion Date"), provided, however,
that the Conversion Price shall be subject to adjustment as described below. The
Payee shall deliver this Note to the Company at the address designated in the
Purchase Agreement at such time that this Note is fully converted. With respect
to partial conversions of this Note, the Company shall keep written records of
the amount of this Note converted as of each Voluntary Conversion Date.
(b) The term "Conversion Price" shall mean an amount equal to $2.40,
subject to adjustment pursuant to Section 5 hereof.
(c) On the Mandatory Conversion Date (as defined below), the
principal amount of this Note plus all accrued and unpaid interest shall
automatically and without any action on the part of the Payee, convert into a
number of fully paid and nonassessable shares of Common Stock equal to the
quotient of (i) the principal amount of the Note plus all accrued and unpaid
interest outstanding on the Mandatory Conversion Date divided by (ii) the
Conversion Price in effect on the Mandatory Conversion Date. As used herein, a
"Mandatory
Conversion Date" shall be any date after the effective date of the Registration
Statement (as defined in the Registration Rights Agreement), provided, that the
closing price of the Common Stock exceeds $4.80 for a period of ten (10)
consecutive trading days and the Registration Statement is effective. The
Mandatory Conversion Date and the Voluntary Conversion Date collectively are
referred to in this Note as the "Conversion Date."
3. Mechanics of Conversion. Not later than three (3) trading days after
any Conversion Date, the Company or its designated transfer agent, as
applicable, shall issue and deliver such number of shares of Common Stock to the
Depository Trust Company ("DTC") account on the Payee's behalf via the Deposit
Withdrawal Agent Commission System ("DWAC") as specified in the Conversion
Notice, registered in the name of the Payee or its designee, to which the Payee
shall be entitled. In the alternative, not later than three (3) trading days
after any Conversion Date, the Company shall deliver to the applicable Payee by
express courier a certificate or certificates which shall be free of restrictive
legends and trading restrictions (other than those required by Section 6 of the
Purchase Agreement) representing the number of shares of Common Stock being
acquired upon the conversion of this Note. If in the case of any Conversion
Notice such certificate or certificates are not delivered to or as directed by
the applicable Payee by the third trading day after the Conversion Date (the
"Delivery Date"), the Payee shall be entitled by written notice to the Company
at any time on or before its receipt of such certificate or certificates
thereafter, to rescind such conversion, in which event the Company shall
immediately return this Note tendered for conversion, whereupon the Company and
the Payee shall each be restored to their respective positions immediately prior
to the delivery of such notice of revocation, except that any amounts described
in Sections 3(b) and (c) shall be payable through the date notice of rescission
is given to the Company.
4. Ownership Cap and Certain Conversion Restrictions.
(a) Notwithstanding anything to the contrary set forth in Section 3
of this Note, at no time may a holder of this Note convert this Note if the
number of shares of Common Stock to be issued pursuant to such conversion would
exceed, when aggregated with all other shares of Common Stock owned by such
holder at such time, the number of shares of Common Stock which would result in
such holder owning more than 4.999% of all of the Common Stock outstanding at
such time; provided, however, that upon a holder of this Note providing the
Company with sixty-one (61) days notice (pursuant to Section 17 hereof) (the
"Waiver Notice") that such holder would like to waive this Section 4(a) with
regard to any or all shares of Common Stock issuable upon conversion of this
Note, this Section 4(a) will be of no force or effect with regard to all or a
portion of the Note referenced in the Waiver Notice.
(b) The Payee may not convert any Note hereunder to the extent such
conversion would result in the Payee beneficially owning (as determined in
accordance with Section 13(d) of the Exchange Act and the rules thereunder) in
excess of 9.999% of the then issued and outstanding shares of Common Stock,
including shares issuable upon conversion of the Note held by the Payee after
application of this Section; provided, however, that upon a holder of this Note
providing the Company with the Waiver Notice that such holder would like to
waive this Section 4(b) with regard to any or all shares of Common Stock
issuable upon conversion of this Note, this Section 4(b) will be of no force or
effect with regard to all or a portion of the Note referenced in the Waiver
Notice.
(c) Notwithstanding anything to the contrary set forth herein, the
Company shall not be obligated to issue in excess of an aggregate of 19.999% of
the number of shares of Common Stock outstanding immediately prior to the
Closing upon conversion of the Notes and any shares of Common Stock issuable in
connection with the Purchase Agreement, which number of shares shall be subject
to adjustment pursuant to Section 5, and such number of shares is hereinafter
referred to as the "Issuable Maximum". Shares of Common Stock issued in respect
of penalties and liquidated damages hereunder shall not count towards the
Issuable Maximum and shall be paid in cash as provided herein unless otherwise
agreed to by the Payees. If on any Conversion Date (A) the Common Stock is
listed for trading on The Nasdaq National Market or The Nasdaq SmallCap Market,
(B) the Conversion Price then in effect is such that the aggregate number of
shares of Common Stock previously issued at a discount upon conversion of Notes
or otherwise issued in connection with the Purchase Agreement, would equal or
exceed the Issuable Maximum, and (C) the Company shall not have previously
obtained the vote of shareholders (the "Shareholder Approval"), if any, as may
be required by the applicable rules and regulations of The Nasdaq Stock Market
Inc. (or any successor entity) applicable to approve the issuance of shares of
Common Stock in excess of the Issuable Maximum pursuant to the terms hereof,
then the Company shall issue to the Payee so requesting such number of shares of
Common Stock equal to such Payee's pro rata portion of the Issuable Maximum as
of the initial purchase date and, with respect to the remainder of shares of
Common Stock which would result in an issuance of shares of Common Stock in
excess of the Issuable Maximum (the "Excess Shares"), the Company shall have the
option to either (1) use its best efforts to obtain the Shareholder Approval
applicable to such issuance as soon as is possible, but in any event not later
than the 90th day after such request, or (2) deliver to such holder cash in an
amount equal to the product of (x) the closing price on the applicable
Conversion Date, and (y) the number of shares of Common Stock in excess of such
Payee's pro rata portion of the Issuable Maximum that would have otherwise been
issuable to the Payee but for the provisions of this Section (such amount of
cash being hereinafter referred to as the "Discount Equivalent"). If the Company
fails to pay the Discount Equivalent in full pursuant to this Section within
fifteen (15) days after the Company fails to obtain Shareholder Approval
pursuant to (1) above or the date payable pursuant to (2) above, the Company
will pay interest thereon at a rate of 10% per annum to the Payee, accruing
daily from the applicable Conversion until such amount, plus all such interest
thereon, is paid in full. The Company and the Payee understand and agree that
shares of Common Stock issued to and then held by the Payee as a result of
conversion of the Notes or as a result of exercise of the Warrants shall not be
entitled to cast votes on any resolution to obtain Shareholder Approval.
5. Adjustment of Conversion Price.
(a) The Conversion Price shall be subject to adjustment from time to
time as follows:
(i) Adjustments for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the date hereof, effect a stock
split of the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the date hereof, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section 5(a)(i) shall be effective at the close of
business on the date the stock split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions. If the
Company shall at any time or from time to time after the date hereof, make or
issue or set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in shares of Common
Stock, then, and in each event, the applicable Conversion Price in effect
immediately prior to such event shall be decreased as of the time of such
issuance or, in the event such record date shall have been fixed, as of the
close of business on such record date, by multiplying, as applicable, the
applicable Conversion Price then in effect by a fraction:
(1) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date; and
(2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such dividend
or distribution.
(iii) Adjustment for Other Dividends and Distributions. If the
Company shall at any time or from time to time after the date hereof, make or
issue or set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in other than
shares of Common Stock, then, and in each event, an appropriate revision to the
applicable Conversion Price shall be made and provision shall be made (by
adjustments of the Conversion Price or otherwise) so that the holders of this
Note shall receive upon conversions thereof, in addition to the number of shares
of Common Stock receivable thereon, the number of securities of the Company
which they would have received had this Note been converted into Common Stock on
the date of such event and had thereafter, during the period from the date of
such event to and including the Conversion Date, retained such securities
(together with any distributions payable thereon during such period), giving
application to all adjustments called for during such period under this Section
5(a)(iii) with respect to the rights of the holders of this Note and the Other
Notes.
(iv) Adjustments for Reclassification, Exchange or Substitution. If
the Common Stock issuable upon conversion of this Note at any time or from time
to time after the date hereof shall be changed to the same or different number
of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections 5(a)(i), (ii)
and (iii), or a reorganization, merger, consolidation or sale of substantially
all of the assets (other than the Excluded Assets (as defined below)) provided
for in Section 5(a)(v)), then, and in each event, an appropriate revision to the
Conversion Price shall be made and provisions shall be made (by adjustments of
the Conversion Price or otherwise) so that the holder of this Note shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein. For purposes of this Note, Excluded Assets shall
mean the assets of the Company disclosed in that certain Non-Disclosure
Agreement dated as of December 17, 2002 by and between the Company and the
Payee.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales
of Assets. If at any time or from time to time after the date hereof there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section 5(a)(i), (ii) and (iii), or a reclassification, exchange or substitution
of shares provided for in Section 5(a)(iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets (other than Excluded Assets) to any
other person (an "Organic Change"), then as a part of such Organic Change an
appropriate revision to the Conversion Price shall be made and provision shall
be made (by adjustments of the Conversion Price or otherwise) so that the holder
of this Note shall have the right thereafter to convert such Note into the kind
and amount of shares of stock and other securities or property of the Company or
any successor corporation resulting from Organic Change. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5(a)(v) with respect to the rights of the holder of this Note after
the Organic Change to the end that the provisions of this Section 5(a)(v)
(including any adjustment in the applicable Conversion Price then in effect and
the number of shares of stock or other securities deliverable upon conversion of
this Note and the Other Notes) shall be applied after that event in as nearly an
equivalent manner as may be practicable.
(vi) Adjustments for Issuance of Additional Shares of Common Stock.
(1) In the event the Company, shall, at any time, from time to
time, issue or sell any shares of additional shares of common stock (including
Treasury Shares) to a third party ("Additional Shares of Common Stock"), at a
price per share less than the Conversion Price then in effect or without
consideration, then the Conversion Price upon each such issuance shall be
adjusted to that price determined by multiplying the Conversion Price then in
effect by a fraction:
(A) the numerator of which shall be equal to the sum of
(x) the number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus (y) the number of shares
of Common Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at a price per share
equal to the Conversion Price then in effect, and
(B) the denominator of which shall be equal to the
number of shares of Common Stock outstanding immediately after the issuance of
such Additional Shares of Common Stock.
(2) The provisions of paragraph (1) of Section 5(a)(vi) shall
not apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 5(a)(vii). No adjustment of the number of
shares of Common Stock for which this Note shall be convertible shall be made
under paragraph (1) of Section 5(a)(vi) upon the issuance of any Additional
Shares of Common Stock which are issued pursuant to the exercise of any Common
Stock Equivalents, if any such adjustment shall previously have been made upon
the issuance of such Common Stock Equivalents pursuant to Section 5(a)(vii).
(vii) Issuance of Common Stock Equivalents. If the Company, at any
time after the date hereof, shall issue any securities convertible into or
exchangeable for, directly or indirectly, Common Stock ("Convertible
Securities"), other than the Notes, or any rights or
warrants or options to purchase any such Common Stock or Convertible Securities,
shall be issued or sold (collectively, the "Common Stock Equivalents") and the
price per share for which Additional Shares of Common Stock may be issuable
thereafter pursuant to such Common Stock Equivalent shall be less than the
applicable Conversion Price then in effect, or if, after any such issuance of
Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price
as so amended shall be less than the applicable Conversion Price in effect at
the time of such amendment, then the applicable Conversion Price upon each such
issuance or amendment shall be adjusted as provided in the first sentence of
subsection (vi) of this Section 5(a) on the basis that (1) the maximum number of
Additional Shares of Common Stock issuable pursuant to all such Common Stock
Equivalents shall be deemed to have been issued (whether or not such Common
Stock Equivalents are actually then exercisable, convertible or exchangeable in
whole or in part) as of the earlier of (A) the date on which the Company shall
enter into a firm contract for the issuance of such Common Stock Equivalent, or
(B) the date of actual issuance of such Common Stock Equivalent, and (2) the
aggregate consideration for such maximum number of Additional Shares of Common
Stock shall be deemed to be the minimum consideration received or receivable by
the Company for the issuance of such Additional Shares of Common Stock pursuant
to such Common Stock Equivalent. No adjustment of the applicable Conversion
Price shall be made under this subsection (vii) upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, if any adjustment shall
previously have been made to the exercise price of such warrants then in effect
upon the issuance of such warrants or other rights pursuant to this subsection
(vii). The consideration for any Additional Shares of Common Stock issuable
pursuant to any warrants or other rights to subscribe for or purchase the same
shall be the consideration received by the Company for issuing such warrants or
other rights plus the additional consideration payable to the Company upon
exercise of such warrants or other rights. The consideration for any Additional
Shares of Common Stock issuable pursuant to the terms of any Common Stock
Equivalents shall be the consideration received by the Company for issuing
warrants or other rights to subscribe for or purchase such Common Stock
Equivalents, plus the consideration paid or payable to the Company in respect of
the subscription for or purchase of such Common Stock Equivalents, plus the
additional consideration, if any, payable to the Company upon the exercise of
the right of conversion or exchange in such Common Stock Equivalents.
(viii) Consideration for Stock. In case any shares of Common Stock
or any Common Stock Equivalents shall be issued or sold:
(1) in connection with any merger or consolidation in which
the Company is the surviving corporation (other than any consolidation or merger
in which the previously outstanding shares of Common Stock of the Company shall
be changed to or exchanged for the stock or other securities of another
corporation), the amount of consideration therefore shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board of Directors
of the Company, of such portion of the assets and business of the nonsurviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or warrants or options, as the case
may be; or
(2) in the event of any consolidation or merger of the Company
in which the Company is not the surviving corporation or in which the previously
outstanding shares of Common Stock of the Company shall be changed into or
exchanged for the stock or other securities of another corporation, or in the
event of any sale of all or substantially all of the
assets of the Company (other than Excluded Assets) for stock or other securities
of any corporation, the Company shall be deemed to have issued a number of
shares of its Common Stock for stock or securities or other property of the
other corporation computed on the basis of the actual exchange ratio on which
the transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation. If any such calculation results in adjustment
of the applicable Conversion Price, or the number of shares of Common Stock
issuable upon conversion of the Notes, the determination of the applicable
Conversion Price or the number of shares of Common Stock issuable upon
conversion of the Notes immediately prior to such merger or consolidation, shall
be made after giving effect to such adjustment of the number of shares of Common
Stock issuable upon conversion of the Notes.
(b) Record Date. In case the Company shall take record of the
holders of its Common Stock for the purpose of entitling them to subscribe for
or purchase Common Stock or Convertible Securities, then the date of the issue
or sale of the shares of Common Stock shall be deemed to be such record date.
(c) Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Conversion Price shall not be adjusted and the Company
shall not be required to make any adjustment of the number of shares of Common
Stock issuable upon conversion of the Notes upon the grant after the date hereof
of, or the exercise after the date hereof of: (i) the shares of Common Stock
issuable upon exercise of the warrants issued pursuant to the Purchase
Agreement; (ii) shares of Common Stock issuable upon conversion of this Note and
the Other Notes; (iii) grants of stock options and issuances of Common Stock
pursuant to the Company's stock option plans and employee stock purchase plans
as they now exist; and (iv) issuances in connection with strategic license
agreements so long as such issuances are not for the purpose of raising capital.
(d) No Impairment. The Company shall not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith, assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the Payee against
impairment.
(e) Certificates as to Adjustments. Upon occurrence of each
adjustment or readjustment of the Conversion Price or number of shares of Common
Stock issuable upon conversion of this Note pursuant to this Section 5, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Payee a certificate setting
forth such adjustment and readjustment, showing in detail the facts upon which
such adjustment or readjustment is based. The Company shall, upon written
request of the Payee, at any time, furnish or cause to be furnished to such
Payee a like certificate setting forth such adjustments and readjustments, the
applicable Conversion Price in effect at the time, and the number of shares of
Common Stock and the amount, if any, of other securities or property which at
the time would be received upon the conversion of this Note. Notwithstanding the
foregoing, the Company shall not be obligated to deliver a certificate unless
such certificate would reflect an increase or decrease of at least one percent
(1%) of such adjusted amount.
(f) Issue Taxes. The Company shall pay any and all issue and other
taxes, excluding federal, state or local income taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of this
Note pursuant thereto; provided, however, that the Company shall not be
obligated to pay any transfer taxes resulting from any transfer requested by any
holder in connection with any such conversion.
(g) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of this Note. In lieu of any fractional shares to which
the Payee would otherwise be entitled, the Company shall pay cash equal to the
product of such fraction multiplied by the average of the closing prices of the
Common Stock for the five (5) consecutive trading days immediately preceding the
Conversion Date.
(h) Reservation of Common Stock. The Company shall at all times when
this Note shall be outstanding, reserve and keep available out of its authorized
but unissued Common Stock, such number of shares of Common Stock as shall from
time to time be sufficient to effect the conversion of this Note and all
interest accrued thereon; provided that the number of shares of Common Stock so
reserved shall at no time be less than 120% of the number of shares of Common
Stock for which this Note and all interest accrued thereon are at any time
convertible. The Company shall, from time to time in accordance with the
Delaware General Corporation Law, as amended, increase the authorized number of
shares of Common Stock if at any time the unissued number of authorized shares
shall not be sufficient to satisfy the Company's obligations under this Section
5.
(i) Regulatory Compliance. If any shares of Common Stock to be
reserved for the purpose of conversion of this Note or any interest accrued
thereon require registration or listing with or approval of any governmental
authority, stock exchange or other regulatory body under any federal or state
law or regulation or otherwise before such shares may be validly issued or
delivered upon conversion, the Company shall, at its sole cost and expense, in
good faith and as expeditiously as possible, endeavor to secure such
registration, listing or approval, as the case may be.
6. Inability to Fully Convert.
(a) Payee's Option if Company Cannot Fully Convert. If, upon the
Company's receipt of a Conversion Notice, the Company cannot issue shares of
Common Stock registered for resale under the Registration Statement (as defined
in the Registration Rights Agreement) for any reason, including, without
limitation, because the Company (i) does not have a sufficient number of shares
of Common Stock authorized and available, (ii) is otherwise prohibited by
applicable law or by the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Company or any of its securities from issuing all of the Common Stock which
is to be issued to the Payee pursuant to a Conversion Notice or (iii) fails to
have a sufficient number of shares of Common Stock registered for resale under
the Registration Statement (as defined in the Registration Rights Agreement),
then the Company shall issue as many shares of Common Stock as it is able to
issue in accordance with the Payee's Conversion Notice and, with respect to the
unconverted portion of this Note, the Payee, solely at Payee's option, can elect
to:
(i) subject to Section 1(c) of this Note, require the Company
to prepay that portion of this Note for which the Company is unable to issue
Common Stock in accordance with the Payee's Conversion Notice (the "Mandatory
Prepayment") at a price equal to
100% of the aggregate principal amount of that portion of this Note plus all
accrued but unpaid interest (the "Mandatory Prepayment Price");
(ii) if the Company's inability to fully convert is pursuant
to Section 6(a)(iii) above, require the Company to issue restricted shares of
Common Stock equal to one hundred percent (100%) of the number of shares of
Common Stock the Company is unable to deliver in accordance with such holder's
Conversion Notice;
(iii) void its Conversion Notice and retain or have returned,
as the case may be, this Note that was to be converted pursuant to the
Conversion Notice (provided that the Payee's voiding its Conversion Notice shall
not effect the Company's obligations to make any payments which have accrued
prior to the date of such notice).
(b) Mechanics of Fulfilling Payee's Election. The Company shall
promptly send via facsimile to the Payee, upon receipt of a facsimile copy of a
Conversion Notice from the Payee which cannot be fully satisfied as described in
Section 6(a) above, a notice of the Company's inability to fully satisfy the
Conversion Notice (the "Inability to Fully Convert Notice"). Such Inability to
Fully Convert Notice shall indicate (i) the reason why the Company is unable to
fully satisfy such Payee's Conversion Notice, (ii) the amount of this Note which
cannot be converted and (iii) the applicable Mandatory Prepayment Price. The
Payee shall notify the Company of its election pursuant to Section 6(a) above by
promptly delivering written notice via facsimile to the Company ("Notice in
Response to Inability to Convert").
(c) Payment of Prepayment Price. Subject to Section 1(c) of this
Note, if the Payee shall elect to have its Notes prepaid pursuant to Section
6(a)(i) above, the Company shall pay the Mandatory Prepayment Price in cash to
the Payee within five (5) business days of the Company's receipt of the Payee's
Notice in Response to Inability to Convert, provided that prior to the Company's
receipt of the Payee's Notice in Response to Inability to Convert the Company
has not delivered a notice to the Payee stating, to the satisfaction of the
Payee, that the event or condition resulting in the Mandatory Prepayment has
been cured and all Conversion Shares issuable to the Payee can and will be
delivered to the Payee in accordance with the terms of this Note. Until the full
Mandatory Prepayment Price is paid in full to the Payee, the Payee may (i) void
the Mandatory Prepayment with respect to that portion of the Note for which the
full Mandatory Prepayment Price has not been paid, (ii) receive back such Note,
and (iii) require that the Conversion Price of such returned Note be adjusted to
the lesser of (A) the Conversion Price as in effect on the date on which the
Payee voided the Mandatory Prepayment and (B) the lowest closing price during
the period beginning on the Conversion Date and ending on the date the Payee
voided the Mandatory Prepayment.
7. No Rights as Shareholder. Nothing contained in this Note shall be
construed as conferring upon the Payee, prior to the conversion of this Note,
the right to vote or to receive dividends or to consent or to receive notice as
a shareholder in respect of any meeting of shareholders for the election of
directors of the Company or of any other matter, or any other rights as a
shareholder of the Company.
8. Payment on Non-Business Days. Whenever any payment to be made shall be
due on a Saturday, Sunday or a public holiday under the laws of the State of New
York, such payment may be due on the next succeeding business day and such next
succeeding day shall not be included in the calculation of the amount of accrued
interest payable on such date.
9. Representations and Warranties of the Company. The Company represents
and warrants to the Payee as follows:
(a) The Company has been duly incorporated and is validly existing
and in good standing under the laws of the state of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently conducted.
(b) This Note has been duly authorized, validly executed and
delivered on behalf of the Company and is a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to
limitations on enforcement by general principles of equity and by bankruptcy or
other laws affecting the enforcement of creditors' rights generally, and the
Company has full power and authority to execute and deliver this Note and to
perform its obligations hereunder.
(c) The execution, delivery and performance of this Note will not
(i) conflict with or result in a breach of or a default under any of the terms
or provisions of, (A) the Company's certificate of incorporation or by-laws, or
(B) any material provision of any indenture, mortgage, deed of trust or other
material agreement or instrument to which the Company is a party or by which it
or any of its material properties or assets is bound, (ii) result in a violation
of any material provision of any law, statute, rule, regulation, or any existing
applicable decree, judgment or order by any court, Federal or state regulatory
body, administrative agency, or other governmental body having jurisdiction over
the Company, or any of its material properties or assets or (iii) result in the
creation or imposition of any material lien, charge or encumbrance upon any
material property or assets of the Company or any of its subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a party or
by which any of them may be bound or to which any of their property or any of
them is subject.
(d) No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required in connection with the valid execution and delivery of this Note.
10. Events of Default. The occurrence of any of the following events shall
be an "Event of Default" under this Note:
(a) the Company shall fail to make the payment of any amount of any
principal outstanding for a period of three (3) business days after the date
such payment shall become due and payable hereunder; or
(b) the Company shall fail to make any payment of interest for a
period of three (3) business days after the date such interest shall become due
and payable hereunder; or
(c) any representation, warranty or certification made by the
Company herein, in the Transaction Documents or in any certificate or financial
statement shall prove to have been false or incorrect or breached in a material
respect on the date as of which made; or
(d) the holder of any indebtedness of the Company or any of its
subsidiaries shall accelerate any payment of any amount or amounts of principal
or interest on any indebtedness (the "Indebtedness") (other than the
Indebtedness hereunder) prior to its stated maturity or payment date the
aggregate principal amount of which Indebtedness of all such persons is in
excess of $500,000, whether such Indebtedness now exists or shall hereinafter be
created, and such accelerated payment entitles the holder thereof to immediate
payment of such Indebtedness which is due and owing and such indebtedness has
not been discharged in full or such acceleration has not been stayed, rescinded
or annulled within ten (10) business days of such acceleration; or
(e) A judgment or order for the payment of money shall be rendered
against the Company or any of its subsidiaries in excess of $200,000 in the
aggregate (net of any applicable insurance coverage) for all such judgments or
orders against all such persons (treating any deductibles, self insurance or
retention as not so covered) that shall not be discharged, and all such
judgments and orders remain outstanding, and there shall be any period of sixty
(60) consecutive days following entry of the judgment or order in excess of
$200,000 or the judgment or order which causes the aggregate amount described
above to exceed $200,000 during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(f) the Company shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property or assets, (ii) admit
in writing its inability to pay its debts as such debts become due, (iii) make a
general assignment for the benefit of its creditors, (iv) commence a voluntary
case under the Bankruptcy Code or under the comparable laws of any jurisdiction
(foreign or domestic), (v) file a petition seeking to take advantage of any
bankruptcy, insolvency, moratorium, reorganization or other similar law
affecting the enforcement of creditors' rights generally, (vi) acquiesce in
writing to any petition filed against it in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or
domestic), or (vii) take any action under the laws of any jurisdiction (foreign
or domestic) analogous to any of the foregoing; or
(g) a proceeding or case shall be commenced in respect of the
Company or any of its subsidiaries without its application or consent, in any
court of competent jurisdiction, seeking (i) the liquidation, reorganization,
moratorium, dissolution, winding up, or composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of it or of all or any substantial part of its assets or (iii) similar
relief in respect of it under any law providing for the relief of debtors, and
such proceeding or case described in clause (i), (ii) or (iii) shall continue
undismissed, or unstayed and in effect, for a period of sixty (60) consecutive
days or any order for relief shall be entered in an involuntary case under the
Bankruptcy Code or under the comparable laws of any jurisdiction (foreign or
domestic) against the Company or any of its subsidiaries or action under the
laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing
shall be taken with respect to the Company or any of its subsidiaries and shall
continue undismissed, or unstayed and in effect for a period of sixty (60)
consecutive days; or
(h) the failure of the Registration Statement (as defined in the
Registration Rights Agreement) to be declared effective by the Securities and
Exchange Commission on or prior to the date which is one hundred fifty (150)
days following the Closing Date; or
(i) the suspension from listing or the failure of the Common Stock
to be listed on The Nasdaq National Market or The Nasdaq SmallCap Market for a
period of five (5) consecutive trading days; or
(j) the Company's notice to the Payee, including by way of public
announcement, at any time, of its inability to comply or its intention not to
comply with proper requests for conversion of this Note into shares of Common
Stock; or
(k) while the Registration Statement (as defined in the Registration
Rights Agreement) is required to be maintained effective pursuant to the terms
of the Registration Rights Agreement, the effectiveness of the Registration
Statement lapses for any reason (including, without limitation, the issuance of
a stop order) or is unavailable to the Payee for sale of the Registrable
Securities (as defined in the Registration Rights Agreement) in accordance with
the terms of the Registration Rights Agreement, and such lapse or unavailability
continues for a period of ten (10) consecutive trading days, provided that the
cause of such lapse or unavailability is not due to factors primarily within the
control of Payee; or
(l) an "Event of Default" has occurred under the Morgan Indebtedness
and results in acceleration of all or any portion of the Morgan Indebtedness.
11. Remedies Upon An Event of Default. If an Event of Default shall have
occurred and shall be continuing, the Payee of this Note may at any time at its
option, (a) declare the entire unpaid principal balance of this Note, together
with all interest accrued hereon, due and payable, and thereupon, the same shall
be accelerated and so due and payable; provided, however, that upon the
occurrence of an Event of Default described in (i) Sections 10(f) and (g),
without presentment, demand, protest, or notice, all of which are hereby
expressly unconditionally and irrevocably waived by the Company, the outstanding
principal balance and accrued interest hereunder shall be automatically due and
payable, and (ii) Sections 10(a) through (e) and Section 10(h) through (l), the
Payee may demand the prepayment of this Note in accordance with the terms and
provisions of Section 6 hereof; or (b) exercise or otherwise enforce any one or
more of the Payee's rights, powers, privileges, remedies and interests under
this Note or applicable law. No course of delay on the part of the Payee shall
operate as a waiver thereof or otherwise prejudice the right of the Payee. No
remedy conferred hereby shall be exclusive of any other remedy referred to
herein or now or hereafter available at law, in equity, by statute or otherwise.
Notwithstanding the foregoing, Payee agrees that its rights and remedies
hereunder are limited to receipt of cash or shares of the Company's equity
securities in the amounts described herein.
12. Company's Prepayment Option. The Company may prepay, at the option of
its Board of Directors, all or any portion of the outstanding principal amount
of this Note and
the accrued and unpaid interest thereon upon thirty (30) days prior written
notice to the Payee (the "Company Prepayment Notice") at a cash price equal to
100% of the sum of the outstanding principal amount of this Note and any
interest accrued and outstanding (the "Company Prepayment Price"). The Company
may not deliver a Company Prepayment Notice to the Payee unless the Company has
clear and good funds for a minimum of the amount it intends to prepay in a bank
account controlled by the Company. The Company Prepayment Notice shall state the
date of prepayment (the "Company Prepayment Date"), the Company Prepayment
Price, the amount of the Note of such Payee to be prepaid, the amount of accrued
and unpaid interest through the Company Prepayment Date and shall call upon the
Payee to surrender to the Company on the Company Prepayment Date at the place
designated in the Company Prepayment Notice such Payee's Note. The Company
Prepayment Date shall be no more than thirty (30) days after the date on which
the Payee is notified of the Company's intent to prepay the Note (the "Company
Prepayment Notice Date"). On or after the Company Prepayment Date, the Payee
shall surrender the Notes called for prepayment to the Company at the place
designated in the Company Prepayment Notice and shall thereupon be entitled to
receive payment of the Company Prepayment Price. Nothing contained in this
Section 12 shall preclude the Payee from converting this Note within such thirty
(30) day period. Upon receipt by the Payee of a Company Prepayment Notice, if
the Payee elects to convert this Note into shares of Common Stock prior to the
Company Prepayment Date, the Company shall issue to the Payee such number of
shares of Common Stock calculated in accordance with Section 2 hereof plus such
additional number of shares of Common Stock equal to the value of the interest
payment due under this Note from the date of conversion to the Maturity Date
divided by the Conversion Price then in effect.
13. Payee's Prepayment Option. If the Company has not delivered to the
Payee a Company Prepayment Notice pursuant to Section 12 hereof within thirty
(30) days following the Determination Date (as defined below), the Payee may
elect to have the Company prepay all or any portion of the outstanding principal
amount of this Note and the accrued and unpaid interest thereon upon ten (10)
business days prior written notice to the Company (the "Payee Prepayment
Notice") at a cash price equal to 100% of the sum of the outstanding principal
amount of this Note and any interest accrued and outstanding (the "Payee
Prepayment Price") provided that the Company's cash balance exceeds $10,000,000
after repayment of the Morgan Indebtedness (the "Determination Date"). The Payee
Prepayment Notice shall state the date of prepayment (the "Payee Prepayment
Date"), the Payee Prepayment Price, the amount of the Note of to be prepaid and
the amount of accrued and unpaid interest through the Payee Prepayment Date. The
Payee shall surrender to the Company on the Payee Prepayment Date at the place
designated by the Company such Payee's Note. The Payee Prepayment Date shall be
no more than ten (10) business days after the date on which the Company is
notified of the Payee's intent to have the Note prepaid (the "Payee Prepayment
Notice Date"). On or after the Payee Prepayment Date, the Payee shall surrender
the Notes called for prepayment to the Company and shall thereupon be entitled
to receive payment of the Payee Prepayment Price.
14. Replacement Upon receipt of a duly executed, notarized and unsecured
written statement from the Payee with respect to the loss, theft or destruction
of this Note (or any replacement hereof), and upon receipt of an indemnity bond
or other security in an adequate amount as reasonably determined by the Company,
or, in the case of a mutilation of this Note, upon surrender and cancellation of
such Note, the Company shall issue a new Note, of like tenor and amount, in lieu
of such lost, stolen, destroyed or mutilated Note.
15. Parties in Interest, Transferability. This Note shall be binding upon
the Company and its successors and assigns and the terms hereof shall inure to
the benefit of the Payee and its successors and permitted assigns. This Note may
be transferred or sold, subject to the provisions of Section 24 of this Note, or
pledged, hypothecated or otherwise granted as security by the Payee.
16. Amendments. This Note may not be modified or amended in any manner
except in writing executed by the Company and the Payee.
17. Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery by telecopy or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The Company will give written notice to the Payee at least
thirty (30) days prior to the date on which the Company closes its books or
takes a record (x) with respect to any dividend or distribution upon the common
stock of the Company, (y) with respect to any pro rata subscription offer to
holders of common stock of the Company or (z) for determining rights to vote
with respect to dissolution, liquidation or winding-up and in no event shall
such notice be provided to such holder prior to such information being made
known to the public. The Company will also give written notice to the Payee at
least twenty (20) days prior to the date on which dissolution, liquidation or
winding-up will take place and in no event shall such notice be provided to the
Payee prior to such information being made known to the public.
Address of the Payee: ________________________
________________________
________________________
Attention: ____________
Tel. No.: (___) ___-____
Fax No.: (___) ___-____
With a copy to: Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Attention: Christopher S. Auguste
Tel. No.: (212) 704-6000
Fax No.: (212) 704-6288
Address of the Company: Wire One Technologies, Inc.
225 Long Avenue
Hillside, New Jersey 07205
Attention: General Counsel
Tel. No.: (973) 282-2000
Fax No.: (973) 391-9776
with a copy to: Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Michael J.W. Rennock
Tel. No.: (212) 468-8000
Fax No.: (212) 468-7999
18. Governing Law. This Note shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to the choice of law provisions. This Note shall not be interpreted or
construed with any presumption against the party causing this Note to be
drafted.
19. Headings. Article and section headings in this Note are included
herein for purposes of convenience of reference only and shall not constitute a
part of this Note for any other purpose.
20. Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity
(including, without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a Payee's right to pursue actual damages for any failure by the
Company to comply with the terms of this Note. Amounts set forth or provided for
herein with respect to payments and the like (and the computation thereof) shall
be the amounts to be received by the Payee and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Payee and
that the remedy at law for any such breach may be inadequate. Therefore the
Company agrees that, in the event of any such breach or threatened breach, the
Payee shall be entitled, in addition to all other available rights and remedies,
at law or in equity, to seek and obtain such equitable relief, including but not
limited to an injunction restraining any such breach or threatened breach,
without the necessity of showing economic loss and without any bond or other
security being required.
21. Failure or Indulgence Not Waiver. No failure or delay on the part of
the Payee in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
22. Enforcement Expenses. The Company agrees to pay all costs and expenses
of enforcement of this Note, including, without limitation, reasonable
attorneys' fees and expenses.
23. Binding Effect. The obligations of the Company and the Payee set forth
herein shall be binding upon the successors and assigns of each such party,
whether or not such successors or assigns are permitted by the terms hereof.
24. Compliance with Securities Laws. The Payee of this Note acknowledges
that this Note is being acquired solely for the Payee's own account and not as a
nominee for any other party, and for investment, and that the Payee shall not
offer, sell or otherwise dispose of
this Note other than in compliance with the laws of the United States of America
and as guided by the rules of the Securities and Exchange Commission. This Note
and any Note issued in substitution or replacement therefore shall be stamped or
imprinted with a legend in substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND
UNDER APPLICABLE STATE SECURITIES LAWS OR WIRE ONE
TECHNOLOGIES, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED."
25. Severability. The provisions of this Note are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
26. Consent to Jurisdiction. Each of the Company and the Payee (i) hereby
irrevocably submits to the jurisdiction of the United States District Court
sitting in the Southern District of New York and the courts of the State of New
York located in New York county for the purposes of any suit, action or
proceeding arising out of or relating to this Note and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Payee
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address set forth in Section 17
hereof and agrees that such service shall constitute good and sufficient service
of process and notice thereof. Nothing in this Section 26 shall affect or limit
any right to serve process in any other manner permitted by law.
27. Company Waivers. (a) Except as otherwise specifically provided herein,
the Company and all others that may become liable for all or any part of the
obligations evidenced by this Note, hereby waive presentment, demand, notice of
nonpayment, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note, and do hereby
consent to any number of renewals of extensions of the time or payment hereof
and agree that any such renewals or extensions may be made without notice to any
such persons and without affecting their liability herein and do further consent
to the release of any person liable hereon, all without affecting the liability
of the other persons, firms or Company liable for the payment of this Note, AND
DO HEREBY WAIVE TRIAL BY JURY.
(b) No delay or omission on the part of the Payee in exercising its
rights under this Note, or course of conduct relating hereto, shall operate as a
waiver of such rights or any other right of the Payee, nor shall any waiver by
the Payee of any such right or rights on any one occasion be deemed a waiver of
the same right or rights on any future occasion.
(c) THE COMPANY ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE
IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE
LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY
PREJUDGMENT REMEDY WHICH THE PAYEE OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO
USE.
IN WITNESS WHEREOF, the Company has executed and delivered this Note as of
the date first written above.
WIRE ONE TECHNOLOGIES, INC.
By: _____________________________________
Name:
Title:
FORM OF
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
The undersigned hereby irrevocably elects to convert $ ________________ of the
principal amount of the above Note No. ___ into shares of Common Stock of WIRE
ONE TECHNOLOGIES, INC. (the "Company") according to the conditions hereof, as of
the date written below.
Date of Conversion _____________________________________________________________
Applicable Conversion Price ____________________________________________________
Signature ______________________________________________________________________
[Name]
Address: _______________________________________________________________________
_______________________________________________________________________