ASSET PURCHASE AGREEMENT
made as of May 30, 2001
by and among
WIRE ONE TECHNOLOGIES, INC.,
GEOVIDEO NETWORKS, INC.,
THOMAS WEISEL CAPITAL PARTNERS LLC,
CREST COMMUNICATIONS PARTNERS LP,
EAST RIVER VENTURES II L.P.
and
LUCENT TECHNOLOGIES, INC.
TABLE OF CONTENTS
Page
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1. Definitions................................................................1
1.1 "Assets"..............................................................1
1.2 "Business Day"........................................................2
1.3 "Closing".............................................................2
1.4 "Closing Date"........................................................3
1.5 "Closing Shares"......................................................3
1.6 "Shares"..............................................................3
1.7 "Warrant Shares"......................................................3
2. Purchase of Assets and Purchase Price......................................3
2.1 Purchase of Assets....................................................3
2.2 Non-Assumption of Liabilities.........................................3
2.3 Closing Deliveries....................................................4
2.4 Purchase Price........................................................5
2.5 Allocation of Purchase Price..........................................5
3. Representations and Warranties of GEO......................................5
3.1 Organization and Standing.............................................5
3.2 Authorization and Binding Obligations.................................5
3.3 No Contravention......................................................6
3.4 Title to Assets.......................................................6
3.5 Litigation............................................................6
3.6 No Liabilities........................................................6
3.7 No Misleading Statements..............................................6
4. Representations and Warranties of the Sellers..............................7
4.1 Authorization and Binding Obligations.................................7
4.2 No Contravention......................................................7
4.3 No Misleading Statements..............................................7
4.4 Securities Act Matters................................................7
5. Representations and Warranties of Buyer....................................9
5.1 Organization and Standing.............................................9
5.2 Authorization and Binding Obligations.................................9
5.3 No Contravention.....................................................10
5.4 Issuance of the Shares and the Warrants..............................10
5.5 SEC Filings..........................................................10
5.6 No Misleading Statements.............................................11
6. Condition Precedent to the Obligations of GEO and the Sellers. ...........11
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7. Conditions Precedent to the Obligations of Buyer..........................11
7.1 GEO's Closing Deliveries.............................................11
7.2 License Agreement....................................................11
7.3 Delivery of Ancillary Agreements.....................................11
7.4 Cash.................................................................12
8. Brokers...................................................................12
9. Survival..................................................................12
10. Indemnification by GEO and the Sellers....................................12
10.1 Joint and Several Obligations........................................12
10.2 Several Obligations..................................................13
11. Indemnification by Buyer..................................................13
12. Indemnification Procedure.................................................13
13. Limitations on Indemnification............................................14
13.1 Basket Amount........................................................14
13.2 Liability Cap........................................................15
13.3 Payment of Indemnification Claims....................................15
14. Certain Actions after the Closing.........................................15
14.1 Delivery of Property Received by GEO After the Closing. .............15
14.2 Cooperation After the Closing........................................15
14.3 Issuance of Shares to Other Shareholders.............................16
14.4 Winding Up and Issuance of Additional Shares.........................16
14.5 Board of Directors...................................................17
14.6 Lock-up..............................................................17
14.7 Right of First Offer.................................................17
14.8 Registration of the Shares and the Warrants..........................17
15. Costs, Expenses, etc......................................................22
16. Notice of Proceedings.....................................................22
17. Notices...................................................................22
18. Headings and Entire Agreement.............................................24
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19. Public Announcements......................................................24
20. Waiver....................................................................24
21. Binding Effect and Assignment.............................................24
22. Counterparts..............................................................24
23. Governing Law.............................................................24
24. Jurisdiction..............................................................25
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EXHIBITS
Exhibit A Form of Class A Warrant to Purchase Common Stock
Exhibit B Form of Class B Warrant to Purchase Common Stock
Exhibit C Form of Former Employee Representation Agreement
Exhibit D Form of Purchaser Representative Agreement
Exhibit E Form of Purchaser Representative Representation Letter
Exhibit F Form of Other Shareholder Representation Agreement
Exhibit G Black-Scholes Assumptions
SCHEDULES
Schedule A List of Former Employees
Schedule B List of Other Shareholders of GEO
Schedule 1.1 Agreements to be Assumed by Buyer
Schedule 1.1(a) Intellectual Property
Schedule 1.1(b) Fixed Assets
Schedule 3.4 Title to Assets--Exceptions
Schedule 3.6 Liabilities of GEO
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ASSET PURCHASE AGREEMENT
AGREEMENT, made as of this 30th day of May, 2001, by and among Wire One
Technologies, Inc., a Delaware corporation ("Buyer"), GeoVideo Networks, Inc., a
Delaware corporation ("GEO"), Thomas Weisel Capital Partners LLC, a Delaware
limited liability company ("Weisel"), Crest Communications Partners LP, a
Delaware limited partnership ("Crest"), East River Ventures II L.P., a Delaware
limited partnership ("East River"), and Lucent Technologies, Inc., a Delaware
corporation ("Lucent", and collectively with Weisel, Crest and East River, the
"Sellers").
W I T N E S S E T H:
WHEREAS, GEO desires to sell, and Buyer desires to purchase, certain assets
owned by or used in the business and operations conducted by GEO, upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, each of the former employees of GEO identified on Schedule A
hereto (the "Former Employees"), and each GEO series C preferred shareholder and
affiliate of Weisel that is shareholder of GEO identified on Schedule B (the
"Other Shareholders") and not a party to this Agreement, has the right to
receive a portion of the consideration for such asset sale; and
WHEREAS, as consideration for such asset sale and purchase, Buyer desires
to issue, and GEO desires to distribute to the Sellers, the Other Shareholders
and the Former Employees, shares of Buyer's common stock, $.0001 par value
("Common Stock"), and warrants to purchase an aggregate of 501,733 shares of
Common Stock at an exercise price of $5.50 per share (the "Class A Warrants")
and an aggregate of 520,123 shares of Common Stock at an exercise price of $7.50
per share (the "Class B Warrants", and, together with the Class A Warrants, the
"Warrants"), upon the terms and subject to the conditions set forth in this
Agreement, the form of Class A Warrant to Purchase Common Stock attached hereto
as Exhibit A and the form of Class B Warrant to Purchase Common Stock attached
hereto as Exhibit B;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings:
1.1 "Assets" means the following tangible and intangible assets owned or
held and used by GEO in connection with its business and operations:
(a) all technology and intellectual property owned by or licensed to
GEO, whether now in existence or in development stage, including, without
limitation, all United States, international and foreign:
(i) patents, patent applications and statutory invention
registrations, including reissuances, divisions, continuations,
continuations in part, extensions and reexaminations thereof, all
inventions, and rights provided by international treaties or
conventions with respect to the foregoing, and all improvements
thereto;
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(ii) trademarks, service marks, trade dress, logos, proprietary
icons, trade names, corporate names, internet domain names and other
source identifiers (whether or not registered) including all common
law rights therein, and registrations and applications for
registration therefor, all rights provided by international treaties
or conventions with respect to the foregoing, and all reissuances,
extensions and renewals and all goodwill associated therewith, other
than the trademark GeoVideo;
(iii) copyrightable works, copyrights (whether or not
registered), and registrations and applications for registration
therefor, and all rights provided by international treaties or
conventions with respect to the foregoing;
(iv) confidential and proprietary information, including trade
secrets, technology, know-how, formulae, databases and customer and
supplier lists;
(v) computer software (including source codes, data and related
documentation); and
(vi) all other proprietary rights, in each case, whether owned or
leased, including, without limitation, the patent, trademark, trade
name, service mark, copyright, license and other proprietary rights
described on Schedule 1.1(a);
(b) the fixed information technology assets owned by or leased to GEO
and described on Schedule 1.1(b); and
(c) $2,500,000 in cash.
Schedule 1.1 identifies each lease, license or other agreement included in
the Assets, specifies the extent, if any, to which Buyer is assuming obligations
under such lease, license or other agreement, and specifies those leases,
licenses and other agreements the assignment of which requires third-party
consent.
1.2 "Business Day" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in the City of
New York, New York.
1.3 "Closing" means the consummation of the purchase, assignment,
conveyance and sale of the Assets contemplated hereunder, which shall take place
on June 1, 2001 at the offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue,
New York, New York 10103 or at such other location as the parties may agree.
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1.4 "Closing Date" means June 1, 2001.
1.5 "Closing Shares" means the 815,661 shares of Common Stock to be issued
at the Closing or prior to the Additional Closing Date (such number of shares
being equal to the integral number of shares of Common Stock (rounded up to the
nearest share) that may be purchased for $2,500,000 at a purchase price of
$3.065 per share of Common Stock).
1.6 "Shares" means the Closing Shares and the Additional Shares (as defined
in Section 14.4), collectively, or shares of Common Stock issued to any of the
Sellers, Other Shareholders or Former Employees, as the context requires.
1.7 "Warrant Shares" shall mean the shares of Common Stock issuable upon
exercise of the Warrants.
2. Purchase of Assets and Purchase Price.
2.1 Purchase of Assets. Subject to the terms and upon satisfaction of the
conditions contained in this Agreement, at the Closing, GEO shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase from GEO, the
Assets for the consideration specified in Section 2.4.
2.2 Non-Assumption of Liabilities. Except as specifically set forth in this
Section 2.2, Buyer expressly does not, and shall not, assume or be deemed to
have assumed under this Agreement or by reason of any transaction contemplated
hereunder or otherwise, any debts, liabilities (contingent or otherwise) or
obligations of GEO of any nature whatsoever. Buyer shall assume the obligations
of GEO arising subsequent to the Closing Date under the contracts, agreements,
and leases of GEO identified on Schedule 1.1, but only to the extent specified
in Schedule 1.1 (collectively, the "Assumed Obligations"); provided, however,
that, notwithstanding any other provision of this Agreement, the Assumed
Obligations shall not include any debts, liabilities (contingent or otherwise)
or obligations of GEO with respect to those Assumed Obligations referred to in
this section, arising out of any contract, agreement, commitment or lease (a)
required to be listed but not listed on Schedule 1.1 hereto regardless of any
knowledge thereof on the part of Buyer or (b) the benefits of which are not
validly assigned to Buyer.
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2.3 Closing Deliveries.
(a) At the Closing, GEO shall deliver to Buyer:
(i) such deeds, bills of sale, endorsements, assignments and
other instruments of sale, conveyance, transfer and assignment,
reasonably satisfactory in form and substance to Buyer and its
counsel, as may be requested by Buyer, in order to convey to Buyer
good and marketable title to the Assets, free and clear of all claims,
charges, equities, liens, security interests and encumbrances;
(ii) all written consents which are required under any contract
or agreement being assigned to Buyer hereunder; provided, however,
that as to any such contract or agreement the assignment of which by
its terms requires prior consent of any of the parties thereto, if
such consent is not obtained prior to or on the Closing Date, GEO
shall deliver to Buyer written documentation setting forth
arrangements for the transfer of the economic benefit of such
contracts or agreements to Buyer as of the Closing Date under terms
and conditions acceptable to Buyer;
(iii) a written notice (the "Distribution Notice") setting forth
the apportionment of the Closing Shares and the Warrants to be
distributed to the Sellers, the Former Employees and the Other
Shareholders (including those Other Shareholders who have not
delivered Other Shareholder Representation Agreements (as defined
below) to Buyer at or prior to the Closing);
(iv) $2,500,000 in cash, by wire transfer of immediately
available funds to the bank account designated by Buyer;
(v) duly executed representation agreements (the "Former Employee
Representation Agreements") in the form attached hereto as Exhibit C,
between each of the Former Employees to Buyer;
(vi) purchaser representative agreements (the "Purchaser
Representative Agreements") in the form attached hereto as Exhibit D,
between Matthew M. O'Connell (the "Purchaser Representative") and each
of the Former Employees and each of the Other Shareholders that wishes
to receive Closing Shares and Warrants at the Closing who is not an
"accredited investor" as such term is defined under the Securities Act
of 1933, as amended (the "Securities Act"), each duly executed by the
Purchaser Representative and the Former Employee or Other Shareholder
party thereto;
(vii) a duly executed representation letter from the Purchaser
Representative to Buyer (the "Purchaser Representative Representation
Letter") in the form attached hereto as Exhibit E; and
(viii) duly executed representation agreements (the "Other
Shareholder Representation Agreements"), in the form attached hereto
as Exhibit F, between Buyer and each Other Shareholder, if any, that
wishes to receive Closing Shares and Warrants at Closing.
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(b) At the Closing, Buyer shall deliver:
(i) to GEO such instruments and documents, satisfactory in form
and substance to the Sellers and their counsel, as may be requested by
the Sellers in order to effect the assumption of the Assumed
Obligations by Buyer; and
(ii) to the Sellers, the Former Employees and any Other
Shareholder that has delivered a duly executed Other Shareholder
Representation Agreement to Buyer, one or more certificates
representing the Closing Shares and the Warrants, registered in the
names of the Sellers, the Former Employees and such Other
Shareholders, as distributees by way of bonus, dividend or other
distribution by GEO, in accordance with the Distribution Notice.
2.4 Purchase Price. The consideration to be paid by Buyer for the Assets
(the "Consideration") shall consist of (a) the Closing Shares, (b) the Warrants,
and (c) Buyer's assumption of the Assumed Obligations.
2.5 Allocation of Purchase Price. The Consideration shall be allocated
among the Assets in a manner to be determined by the parties prior to the time
of any required tax fillings with respect thereto and the parties agree to
report this transaction for Federal tax purposes in accordance with such
allocation.
3. Representations and Warranties of GEO. GEO represents, warrants and
covenants to Buyer that:
3.1 Organization and Standing. GEO (a) is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
(b) has full right, power and authority to enter into and perform and do all
things contemplated under this Agreement and all documents and agreements
necessary to give effect to the provisions of this Agreement, to own and lease
the Assets and to carry on and operate its business and operations as now being
conducted and proposed to be conducted by it under existing agreements, (c) is
duly qualified or licensed to do business and is in good standing as a foreign
corporation in every jurisdiction in which the character of the Assets or nature
of the business conducted by it requires such qualification, and (d) does not
own any of the Assets, and does not conduct any of its business or operations,
through any other corporation, limited liability company, partnership or other
entity.
3.2 Authorization and Binding Obligations. The execution, delivery and
performance of this Agreement by GEO has been duly and validly authorized by all
necessary corporate action, including approval of the entire transaction by the
requisite vote of GEO's shareholders. This Agreement has been duly executed and
delivered by GEO and constitutes a valid and binding agreement of GEO,
enforceable in accordance with its terms, except as its enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws relating to or
affecting creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles. Schedule B sets forth the names of
the owners of all of the issued and outstanding capital stock of GEO.
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3.3 No Contravention. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and the
compliance with the provisions hereof by GEO do not (a) violate any provision of
the certificate of incorporation, bylaws or any certificate of designations with
respect to preferred stock of GEO, (b) conflict with, result in the breach of,
or constitute a default under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the Assets, or require any
authorization, consent, approval, exemption or other action by or notice to any
third party, court or other governmental or administrative body, under the
provisions of any agreement or other instrument to which GEO is a party or by
which any of the Assets are bound or affected or (c) violate any laws,
regulations, orders or judgments applicable to GEO.
3.4 Title to Assets. Except as set forth in Schedule 3.4, GEO has good and
marketable title to the Assets, free and clear of all mortgages, pledges,
claims, liens, charges, preemptive purchase rights or any other encumbrances.
Except as set forth in Schedule 3.4, the bill of sale and assignment, assumption
agreement, power of attorney and other instruments delivered to Buyer by GEO at
the Closing will vest in Buyer, and the transfer to Buyer by GEO of the Assets
on the Closing Date will convey to Buyer, good and marketable title to the
Assets, free and clear of all mortgages, pledges, claims, liens, charges,
preemptive purchase rights or any other encumbrances whatsoever. GEO has taken
all necessary action to protect the patent, trademark, trade name, service mark,
copyright, license and other proprietary rights included in the Assets. The
operations and business conducted by GEO do not infringe upon or conflict with
any patent, trademark, trade name, service mark, copyright, license or other
proprietary right of any third party, and GEO has not received any notice of
infringement upon or conflict with the asserted rights of others.
3.5 Litigation. There are no actions, suits, proceedings or investigations
of any nature at law or in equity, pending or, to the best of the GEO's
knowledge, threatened against or relating to any of the Assets, and no judgment,
award, order or decree has been rendered against GEO, and the Assets are not
subject to any judgment, award, order or decree.
3.6 No Liabilities. Except as set forth in Schedule 3.6, there are no
liabilities or obligations of GEO existing on the date hereof.
3.7 No Misleading Statements. No information furnished by or on behalf of
GEO to Buyer contains any untrue statement of a material fact or omits to state
a material fact necessary to make such statement, in the light of the
circumstances under which it was made, not misleading. All written information,
in whatever form, furnished by GEO to Buyer was true and correct as of the date
so furnished and, except as the accuracy thereof is affected by the passage of
time, remains true and correct in all material respects as of the date hereof.
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4. Representations and Warranties of the Sellers. Each of the Sellers,
severally and not jointly, represents, warrants and covenants to Buyer that:
4.1 Authorization and Binding Obligations. The execution, delivery and
performance of this Agreement by such Seller has been duly and validly
authorized by all necessary corporate, company, partnership or other action.
This Agreement has been duly executed and delivered by such Seller and
constitutes a valid and binding agreement of such Seller, enforceable in
accordance with its terms, except as its enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws relating to or affecting
creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles. Such Seller is a shareholder of
GEO.
4.2 No Contravention. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and the
compliance with the provisions hereof by such Seller do not (a) violate any
provision of the organizational documents of such Seller, (b) conflict with,
result in the breach of, or constitute a default under, or require any
authorization, consent, approval, exemption or other action by or notice to any
third party, court or other governmental or administrative body, under the
provisions of any agreement or other instrument to which such Seller is a party
or by which the property of such Seller is bound or affected or (c) violate any
laws, regulations, orders or judgments applicable to such Seller.
4.3 No Misleading Statements. No information furnished by or on behalf of
such Seller to Buyer contains any untrue statement of a material fact or omits
to state a material fact necessary to make such statement, in the light of the
circumstances under which it was made, not misleading. All written information,
in whatever form, furnished by such Seller to Buyer was true and correct as of
the date so furnished and, except as the accuracy thereof is affected by the
passage of time, remains true and correct in all material respects as of the
date hereof.
4.4 Securities Act Matters.
(a) it acknowledges that its representations and warranties contained
herein are being relied upon by Buyer as a basis for the exemption of the
issuance of the Shares and the Warrants hereunder from the registration
requirements of the Securities Act and any applicable state securities
laws;
(b) it understands that (i) as of the Closing Date, neither the
Shares, the Warrants nor the Warrant Shares will be registered under the
Securities Act or any state securities laws by reason of their issuance in
a transaction exempt from the registration requirements of the Securities
Act and applicable state securities laws and (ii) the Shares, the Warrants
and the Warrant Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and applicable
state securities laws or is exempt from such registration;
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(c) it is acquiring the Shares and the Warrants for its own account
and not with a view to, or for sale in connection with, directly or
indirectly, any distribution thereof that would require registration under
the Securities Act or applicable state securities laws or would otherwise
violate the Securities Act or such state securities laws;
(d) it has relied upon independent investigations made by it or its
representatives and is fully familiar with the business, results of
operations, financial condition, prospects and other affairs of Buyer and
realizes that the Shares and the Warrants are a speculative investment
involving a high degree of risk for which there is no assurance of any
return;
(e) it has such knowledge and experience in financial and business
affairs, including investing in companies similar to Buyer, and is capable
of determining the information necessary to make an informed investment
decision, of requesting such information from Buyer, and of utilizing the
information that it has received from Buyer to evaluate the merits and
risks of its investment in the Shares and the Warrants, and is able to bear
the economic risk of its investment in the Shares and the Warrants and
understands that it must do so for an indefinite period of time;
(f) it and its attorneys, accountants, investment and financial
advisors, if any, have been provided access to such information about Buyer
as it or its advisors, if any, have requested;
(g) it is an "accredited investor" as defined in Regulation D under
the Securities Act; and
(h) it understands that the Shares will bear the following legend (or
a substantially similar legend):
"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. THE HOLDER OF
THESE SECURITIES MAY NOT SELL, OFFER, CONTRACT TO
SELL, PLEDGE, GRANT ANY OPTION TO PURCHASE OR
OTHERWISE DISPOSE OF THESE SECURITIES PRIOR TO THE
90TH DAY AFTER THE DATE OF ISSUANCE OF THESE
SECURITIES.",
8
and the Warrants will bear the following legend (or a substantially similar
legend):
"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."
5. Representations and Warranties of Buyer. Buyer represents, warrants and
covenants to GEO and the Sellers that:
5.1 Organization and Standing. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate right, power and authority to enter into and perform and do
all things contemplated under this Agreement and all documents and agreements
necessary to give effect to the provisions of this Agreement.
5.2 Authorization and Binding Obligations. The execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary corporate action, including approval of the entire transaction by the
requisite vote of the board of directors of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a valid and binding agreement of
Buyer, enforceable in accordance with its terms, except as its enforceability
may be limited by bankruptcy, insolvency, moratorium or other laws relating to
or affecting creditors' rights generally and the exercise of judicial discretion
in accordance with general equitable principles.
9
5.3 No Contravention. The execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and the
compliance with the provisions hereof by Buyer do not (a) violate any provision
of the certificate of incorporation or bylaws of Buyer, (b) conflict with,
result in the breach of, or constitute a default under, or require any
authorization, consent, approval, exemption or other action by or notice to any
third party, court or other governmental or administrative body, under the
provisions of any agreement or other instrument to which Buyer is a party or by
which the property of Buyer is bound or affected, or (c) violate any laws,
regulations, orders or judgments applicable to Buyer.
5.4 Issuance of the Shares and the Warrants. Upon issuance to the Sellers
hereunder, the Shares shall be validly issued, fully paid and non-assessable,
the Warrants shall be validly issued, and the Shares and the Warrants shall be
free and clear of any liens, claims and encumbrances. Upon issuance in
accordance with the terms of the Warrants, the Warrant Shares shall be validly
issued, fully paid and non-assessable and free and clear of any liens, claims
and encumbrances.
5.5 SEC Filings. The Common Stock is registered pursuant to Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Buyer has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Securities and Exchange Commission (the
"SEC") pursuant to the reporting requirements of the Exchange Act, including
material filed pursuant to Section 13(a) or 15(d) thereof. Buyer has delivered
or made available to the Sellers true and complete copies of the following
documents (the "SEC Documents") filed with the SEC:
(a) Buyer's Annual Report on Form 10-K for the year ended December 31,
2000;
(b) Buyer's Quarterly Report on Form 10-Q for the quarter ended March
31, 2001; and
(c) Buyer's proxy statement in connection with its Annual Meeting of
Stockholders on May 25, 2001.
Buyer has not provided the Sellers any material non-public information or
any information which, according to applicable law, rule or regulation, should
have been disclosed publicly by Buyer but which has not been so disclosed. As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The SEC Documents contain all material information concerning Buyer,
and no event or circumstance has occurred which would require Buyer to disclose
such event or circumstance in order to make the statements in the SEC Documents
not misleading on the date hereof but which has not been so disclosed.
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5.6 No Misleading Statements. No information furnished by or on behalf of
Buyer to Sellers contains any untrue statement of a material fact or omits to
state a material fact necessary to make such statement, in the light of the
circumstances under which it was made, not misleading. All written information,
in whatever form, furnished by Buyer to Sellers was true and correct as of the
date so furnished and, except as the accuracy thereof is affected by the passage
of time, remains true and correct in all material respects as of the date
hereof.
6. Condition Precedent to the Obligations of GEO and the Sellers. The
obligations of GEO and the Sellers under this Agreement are subject to the
receipt by GEO, the Sellers, the Former Employees and the Other Shareholders
that have delivered duly executed Other Shareholder Representation Agreements to
Buyer, on or prior to the Closing Date, of the instruments and other documents
required to be delivered to such parties by Buyer pursuant to Section 2.3(b).
7. Conditions Precedent to the Obligations of Buyer. The obligations of
Buyer under this Agreement are subject to the satisfaction on or prior to the
Closing Date of each of the following express conditions precedent, except such
conditions as may be waived by Buyer:
7.1 GEO's Closing Deliveries. Buyer shall have received the instruments and
other documents required to be delivered to it by GEO pursuant to Section
2.3(a).
7.2 License Agreement. GEO and the other parties to the Joint Development
Agreement, effective as of January 7, 2000, between Lucent Technologies, Inc.
and VideoNet Solutions, Inc. (predecessor to GEO), as amended and supplemented
from time to time, shall have executed and delivered an amendment to such
agreement, on terms and conditions satisfactory to Buyer.
7.3 Delivery of Ancillary Agreements. Each of the Former Employees shall
have delivered to Buyer a duly executed Former Employee Representation
Agreement, each of the Former Employees who is not an "accredited investor" as
such term is defined in Regulation D under the Securities Act and the Purchaser
Representative shall have entered into a Purchaser Representative Agreement and
each such duly executed Purchaser Representative Agreement shall have been
delivered to Buyer, the Purchaser Representative shall have delivered to Buyer a
duly executed Purchaser Representative Representation Letter and each Other
Shareholder that wishes to receive Closing Shares and Warrants at Closing shall
have delivered to Buyer a duly executed Other Shareholder Representation
Agreement.
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7.4 Cash. GEO shall have delivered evidence reasonably satisfactory to
Buyer that the cash and cash equivalents of GEO total at least $2,500,000 as of
the date hereof.
8. Brokers. Each of Buyer, on the one hand, and GEO and the Sellers, on the
other, represents and warrants to the other that, except for the engagement of
H.C. Wainwright & Co., Inc. by Buyer, the fees for which shall be paid by Buyer,
such party has not engaged a broker or finder in connection with this Agreement
and the transactions contemplated herein or any aspect thereof. Each party
agrees to indemnify and hold the other harmless from any and all loss, cost,
liability, damage and expense (including reasonable legal and other expenses
incident thereto) in respect of any claim for a broker's or finder's fee or
commission or similar payment by virtue of any alleged agreements, arrangements
or understandings with the indemnifying party. Notwithstanding any other
provision of this Agreement, the representations, warranties and covenants
contained in this Section 8 shall survive the Closing Date without limitation.
9. Survival. Except as otherwise expressly provided herein, the several
representations, warranties, covenants, and agreements of the parties contained
in this Agreement (or in any document delivered in connection herewith) shall be
deemed to be material and to have been relied upon by Buyer, GEO and the Sellers
notwithstanding any investigation made by Buyer, GEO or the Sellers, shall
survive the Closing Date and shall remain operative and in full force and effect
for a period of one year following the Closing Date, except insofar as an
indemnification claim has been asserted by any party and has not been resolved
prior to the end of such one-year period; provided, however, that the respective
representations, warranties, covenants and agreements of Buyer, GEO and the
Sellers contained in Sections 3.4, 3.6, 5.4, 10.1(a), 11(a), 13, 14.1, 14.2 and
15 shall continue without any time limitation.
10. Indemnification by GEO and the Sellers.
10.1 Joint and Several Obligations. GEO and each of the Sellers, jointly
and severally, shall indemnify and hold harmless Buyer, its successors and
assigns, at all times after the Closing Date, against and in respect of:
(a) Liabilities of GEO. Other than liabilities expressly assumed by
Buyer as provided in Section 2.2 of this Agreement, all liabilities and
obligations of GEO of any kind or nature whatsoever relating to GEO,
whether accrued, absolute, fixed, contingent or otherwise, known or
unknown;
(b) Misrepresentations. Any damage, loss, cost, expense or liability
(including reasonable attorneys' fees) resulting to Buyer from any false,
misleading or inaccurate representation, breach of warranty or
non-fulfillment of any agreement or condition on the part of GEO under this
Agreement or from any misrepresentation in or any omission from any
certificate, schedule or other instrument furnished or to be furnished to
Buyer hereunder; and
(c) Actions and Suits. All claims, actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing.
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10.2 Several Obligations. Each of Sellers, severally and not jointly, shall
indemnify and hold harmless Buyer, its successors and assigns, at all times
after the Closing Date, against and in respect of:
(a) Misrepresentations. Any damage, loss, cost, expense or liability
(including reasonable attorneys' fees) resulting to Buyer from any false,
misleading or inaccurate representation, breach of warranty or
non-fulfillment of any agreement or condition on the part of such Seller
under this Agreement or from any misrepresentation in or any omission from
any certificate, schedule or other instrument furnished or to be furnished
by such Seller to Buyer hereunder; and
(b) Actions and Suits. All claims, actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing.
11. Indemnification by Buyer. Buyer shall indemnify and hold harmless GEO
and the Sellers, their successors and assigns, at all times after the Closing
Date, against and in respect of:
(a) Assumed Obligations. All Assumed Obligations;
(b) Misrepresentations. Any damage, loss, cost, expense or liability
(including reasonable attorneys' fees) resulting to the Sellers from any
false, misleading or inaccurate representation, breach of warranty or
non-fulfillment of any agreement or condition on the part of Buyer under
this Agreement or from any misrepresentation in or any omission from any
certificate or other instrument furnished or to be furnished to the Sellers
hereunder; and
(c) Actions and Suits. All claims, actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing.
12. Indemnification Procedure.
12.1 A party that may be entitled to indemnification pursuant to Section 10
or 11 (the "Indemnitee") shall promptly give written notice (a "Notice of
Claim") to the party liable for such indemnification (the "Indemnitor"). A
Notice of Claim shall set forth (a) a description, in reasonable detail, of the
facts and circumstances with respect to the subject matter of such claim or
potential claim for indemnification, and (b) the anticipated total amount of the
indemnification claim (including any costs or expenses which have been or may be
reasonably incurred in connection therewith). Upon receipt of a Notice of Claim,
the Indemnitor may elect to cure the circumstances giving rise to the
indemnification claim (the "Event of Loss") within thirty (30) days after the
date of receipt of the Notice of Claim. If such cure cannot be effected within
such 30-day period, payment of the amount of actual damage, loss, cost, expense
or liability (including reasonable attorneys' fees) (collectively, "Damages")
due to the Indemnitee as set forth in the Notice of Claim shall be made by
Indemnitor no later than the thirtieth (30th) day after the date of the Notice
of Claim (or such later date as the Indemnitor receives written notice that the
Indemnitee has suffered Damages). The Indemnitee's failure to give prompt notice
or to provide copies of documents or to furnish relevant data shall not
constitute a defense (in whole or in part) to any claim by the Indemnitee
against the Indemnitor for indemnification, except and only to the extent that
such failure shall have caused or increased such liability or adversely affected
the ability of the Indemnitor to defend against or reduce its liability.
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12.2 If the Indemnitor shall reject any Damages as to which a Notice of
Claim is sent by the Indemnitee, the Indemnitor shall give written notice of
such rejection to the Indemnitee within thirty (30) days after the date of
receipt of the Notice of Claim.
12.3 If any Notice of Claim relates to any claim made against an Indemnitee
by a third person, the Notice of Claim shall state the nature, basis and amount
of such claim. The Indemnitor shall have the right, at its election, by written
notice to the Indemnitee, to assume the defense of the claim as to which such
notice has been given. Except as provided in the next sentence, if the
Indemnitor so elects to assume such defense, it shall diligently and in good
faith defend such claim and shall keep the Indemnitee reasonably informed of the
status of such defense, and the Indemnitee shall cooperate fully with the
Indemnitor in the defense of such claim, provided that in the case of any
settlement providing for remedies other than monetary damages for which
indemnification is provided, the Indemnitee shall have the right to approve the
settlement, which approval shall not be unreasonably withheld or delayed. If the
Indemnitor does not so elect to defend any claim as aforesaid or shall fail to
defend any claim diligently and in good faith (after having so elected), the
Indemnitee may assume the defense of such claim and take such other action as it
may elect to defend or settle such claim as it may determine in its reasonable
discretion, provided that the Indemnitor shall have the right to approve any
settlement, which approval will not be unreasonably withheld or delayed.
13. Limitations on Indemnification.
13.1 Basket Amount.
(a) The indemnification provided for in Section 10 shall not apply
until Buyer's claims for Damages exceed $100,000 in the aggregate,
whereupon claim may be made for all amounts in excess of $100,000, subject
to Section 13.2; provided, however, that indemnification for Damages
relating to any claim against Buyer by a Former Employee or Other
Shareholder with respect to the transactions contemplated under this
Agreement shall apply from the first dollar and shall not be subject to the
basket amount set forth in this Section 13.1(a).
(b) The indemnification provided for in Section 11 shall not apply
until the Sellers' collective claims for indemnification exceed $100,000 in
the aggregate, whereupon claim may be made for all amounts in excess of
$100,000, subject to Section 13.2.
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13.2 Liability Cap. Notwithstanding anything to the contrary in this
Agreement, in no event shall the aggregate amount of collective liability of the
Sellers and GEO under Section 10 or the liability of Buyer under Section 11
(including all costs, expenses and attorneys' fees paid or incurred by the
Sellers or Buyer in connection therewith) exceed $1,250,000.
13.3 Payment of Indemnification Claims. In the event that the Sellers or
GEO are entitled to indemnification pursuant to Section 11, Buyer shall make
payment of such indemnification claim in cash. In the event that Buyer is
entitled to indemnification pursuant to Section 10, the payment of such
indemnification by the Sellers and GEO shall be effected by the reduction of the
number of shares of Common Stock issuable under the Class B Warrants held by the
Sellers required to furnish such indemnification to the extent of such
indemnification obligation, and such reduction shall constitute the sole source
of indemnification of Buyer under this Agreement. For purposes of satisfying
such indemnification obligation, the number of shares of Common Stock issuable
under the Class B Warrants held by a Seller shall be reduced based upon the
value of the Class B Warrants held by such Seller on the date on which such
indemnification payment shall be made. Such valuation shall be calculated in
accordance with the Black-Scholes model using the assumptions attached hereto as
Exhibit G. For purposes of such calculation, the share price of the Common Stock
shall be equal to the average closing price of the Common Stock on the Nasdaq
National Market for the twenty consecutive trading days ending on the trading
day immediately prior to the date upon which the indemnification payment shall
be made. In the event that Buyer asserts an indemnification claim under this
Agreement at any time after the Class B Warrants, by their terms, have become
exercisable, Buyer shall be entitled to effect payment of any indemnification to
which it is otherwise entitled by reducing the number of shares of Common Stock
issuable under the Class B Warrants held by the Sellers required to furnish such
indemnification, to the extent such Class B Warrants have not been exercised.
14. Certain Actions after the Closing.
14.1 Delivery of Property Received by GEO After the Closing. GEO agrees
that it will transfer or make available to Buyer, promptly after the receipt
thereof, any property which GEO receives after the Closing Date in respect of
the Assets transferred or intended to be transferred to Buyer under this
Agreement. Buyer agrees that GEO may sell any assets not included in the Assets
and make available to Buyer the cash proceeds in exchange for Additional Shares
pursuant to Section 14.4.
14.2 Cooperation After the Closing. The parties shall, at any time, and
from time to time, after the Closing Date, execute and deliver such further
instruments of conveyance and transfer and take such additional action or may be
reasonably necessary to effect, consummate, confirm or evidence the transactions
contemplated by this Agreement, including using their best efforts to obtain any
third party consents not obtained as of the Closing Date.
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14.3 Issuance of Shares to Other Shareholders. After the Closing and prior
to the Additional Closing Date (as defined in Section 14.4), Buyer shall, upon
receipt of a duly executed Other Shareholder Representation Agreement from any
Other Shareholder who did not execute and deliver such Other Shareholder
Representation Agreement to Buyer at or prior to the Closing, issue to such
Other Shareholder its share of the Closing Shares and the Warrants as set forth
in the Distribution Notice. At the Additional Closing, Buyer shall issue to GEO
the Closing Shares and Warrants in respect of any Other Shareholder that has not
executed and delivered to Buyer an Other Shareholder Representation Agreement.
Upon receipt of any Closing Shares or Warrants, GEO agrees that its shall be
deemed to have made to Buyer the representations, warranties and covenants
contained in Section 4.4.
14.4 Winding Up and Issuance of Additional Shares. After the Closing Date,
GEO shall (a) use any cash or cash equivalents in excess of $2,500,000 to
satisfy its liabilities, including, without limitation, all liabilities relating
to the termination of all of its employees, (b) sell its remaining non-cash
assets not transferred to Buyer hereunder in one or more cash transactions on an
arms'-length basis on commercially reasonable terms and (c) otherwise wind up
its business and operations. Upon the substantial completion of such activities,
GEO shall notify Buyer in writing of a date (the "Additional Closing Date") upon
which an additional closing (the "Additional Closing") shall occur. GEO shall
furnish such written notice to Buyer at least seven days prior to such
Additional Closing Date, and such Additional Closing Date shall be no less than
30 days and no more than 60 days subsequent to the Closing Date. After
furnishing such written notice to Buyer, GEO shall furnish Buyer reasonable
access to its books and records with respect to its activities between the
Closing Date and the Additional Closing Date. At the Additional Closing, GEO, by
wire transfer of immediately available funds to the bank account designated by
Buyer, shall pay to Buyer the amount of cash and cash equivalents held by GEO on
the Additional Closing Date (less an allowance of up to $25,000 in the event
that GEO has not completed the activities set forth in the first sentence of
this Section 14.4) (such amount, the "Additional Closing Consideration"), in
exchange for which Buyer shall issue and deliver to GEO one or more certificates
representing an integral number of additional shares (rounded up to the nearest
share) of Common Stock (the "Additional Shares") equal to (x) the Additional
Closing Consideration divided by (y) a purchase price of $3.065 per share of
Common Stock. Buyer shall issue the Additional Shares in the names of the
Sellers, the Former Employees and the Other Shareholders, as distributees by way
of bonus, dividend or other distribution by GEO (or, with respect to any Other
Shareholder that has not delivered an Other Shareholder Representation Agreement
to GEO prior to the Additional Closing Date, to GEO), in accordance with a
written notice delivered to Buyer by GEO at the Additional Closing, which
written notice shall set forth the number of Additional Shares that shall be
distributed to each Seller, Former Employee and Other Shareholder. On the date
of the issuance of the Additional Shares, each Seller that receives Additional
Shares, and GEO, if it is issued any Additional Shares, shall be deemed to have
made the representations, warranties and covenants set forth in Section 4 as of
such issuance date.
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14.5 Board of Directors. Buyer shall, as soon as practicable after the
Closing Date, use its best efforts to cause (a) the number of directors
constituting the Board of Directors of Buyer to be increased from seven to
eight, and (b) a representative of the Sellers reasonably acceptable to Buyer to
be nominated to serve on the Board of Directors of Buyer; provided, however,
that Buyer shall have no further obligation under this Section 14.5 from and
after the date that Sellers hold fewer that 50% of the Shares.
14.6 Lock-up. Each Seller hereby agrees that it shall not sell, offer,
contract to sell, pledge, grant any option to purchase or otherwise dispose of
any of the Shares or the Warrants prior to the 90th day after the date hereof.
14.7 Right of First Offer. If at any time or times during the twelve month
period following the Closing Date Buyer issues or agrees to issue for cash in an
equity financing any Common Stock or other equity securities of Buyer, or any
rights, options, warrants or other securities which are directly or indirectly
convertible into Common Stock or other equity securities of Buyer, the Sellers
collectively shall have the right of first offer to purchase, on terms no less
favorable to the Sellers than the terms under which Buyer proposes to issue such
securities, up to 30% of the securities proposed to be issued by Buyer. The
foregoing provision shall not apply to (a) 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 hereof in accordance
with such securities' current exercise or conversion terms, (b) issuances of
shares of Common Stock pursuant to the exercise of employee stock options, (c)
issuances of shares of Common Stock or other equity securities of Buyer, or any
rights, options, warrants or other securities which are directly or indirectly
convertible into Common Stock or other equity securities of Buyer, in connection
with the acquisition of any business or assets by Buyer or (d) issuances of
shares of Common Stock or other equity securities pursuant to an underwritten
public offering by Buyer.
14.8 Registration of the Shares and the Warrants.
(a) Buyer shall:
(i) as soon as practicable after the issuance of the Additional
Shares, prepare and file with the SEC a registration statement on Form
S-3 (the "Registration Statement") relating to the resale of the
Shares and the Warrant Shares by the Sellers;
(ii) use its reasonable efforts, subject to receipt of necessary
information from the Sellers, to cause the SEC to declare the
Registration Statement effective as promptly as practicable after the
Registration Statement is filed by Buyer;
(iii) promptly prepare and file with the SEC (and provide notice
to the Sellers of any such filing) such amendments and supplements to
the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement
effective until the earlier of (A) the date all of the Shares and
Warrant Shares covered by the Registration Statement have been sold by
the Sellers, or (B) the date that is the third anniversary of the
effective date of the Registration Statement;
17
(iv) furnish to each Seller with respect to the Shares and the
Warrant Shares registered under the Registration Statement such number
of copies of prospectuses as such Seller may reasonably request in
order to facilitate the public sale or other disposition by such
Seller of all or any of the Shares and the Warrant Shares registered
under the Registration Statement;
(v) notify each holder of Shares and Warrant Shares covered by
such Registration Statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in
such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing. Buyer will use reasonable best efforts to amend or
supplement such prospectus in order to cause such prospectus not to
include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing; provided, however, that Buyer, in good faith, may delay
the filing of any such amendment or supplement for a reasonable period
of time in order to permit Buyer (A) to effect disclosure or
disposition or consummation of any transaction requiring confidential
treatment which is being actively pursued at such time and which would
require disclosure in the Registration Statement or (B) to negotiate,
effect or complete any transaction which Buyer reasonably believes
might be jeopardized, delayed or made more costly to Buyer by
disclosure in the Registration Statement; and
(vi) bear all expenses in connection with the procedures in
paragraphs (i) through (v) of this Section 14.8(a) and the
registration of the Shares and the Warrant Shares covered by the
Registration Statement pursuant to the Registration Statement, other
than fees and expenses, if any, of counsel and other advisers to the
Sellers or underwriting discounts, brokerage fees and commissions
incurred by the Sellers, if any.
(b) (i) Notwithstanding the generality of the foregoing clauses, each
Seller agrees that upon notice from Buyer at any time or from time to time
during the time the prospectus relating to the Shares and the Warrant
Shares covered by the Registration Statement and proposed to be sold by
such Seller is required to be delivered under the Securities Act of the
happening of any event as a result of which, in Buyer's opinion, the
prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing, such Seller will forthwith discontinue such Seller's disposition
of such securities pursuant to the Registration Statement until the time of
such Seller's receipt of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to Buyer of such
securities, such prospectus shall not include, in Buyer's opinion, an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
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(ii) Each Seller shall furnish Buyer such information regarding
such Seller and the distribution of the Shares and the Warrant Shares
covered by the Registration Statement as Buyer may from time to time
reasonably request in writing.
(iii) Each Seller agrees to give at least two (2) Business Days'
prior written notice to Buyer of any proposed sale of the Shares and
the Warrant Shares covered by the Registration Statement pursuant to
the Registration Statement and not to make such sale (A) unless such
two (2) Business Days elapse without response from Buyer, or (B) in
the event Buyer responds by stating that an amendment to the
Registration Statement or supplement to the prospectus must be filed
in accordance with the second sentence of Section 14.8(a)(v), until
Buyer notifies the Sellers that the Registration Statement has been
amended or the prospectus supplemented as required; provided, however,
that Buyer agrees to file such amendment or supplement promptly upon
the resolution of the disclosure issue necessitating such delay, or,
in any event, not more than 30 days after receipt of Buyer's written
notice.
(c) Buyer will use its commercially reasonable efforts to cause the
Shares and the Warrant Shares covered by and to be sold pursuant to the
Registration Statement to be listed on any securities exchanges or markets
on which shares of Common Stock are then listed.
(d) (i) In the event of a registration of any of the Shares and the
Warrant Shares under the Securities Act pursuant to this Section 14.8,
Buyer will, to the extent permitted by applicable law, indemnify and hold
harmless each Seller against all losses, claims, damages or liabilities,
joint or several, to which such Seller may become subject under the
Securities Act, the Exchange Act or any other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement
of any litigation, if such settlement is effected with the written consent
of Buyer), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, including the prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at
the time of effectiveness of the Registration Statement, including any
information deemed to be a part thereof as of the time of effectiveness
pursuant to paragraph (b) of SEC Rule 430A, or pursuant to SEC Rule 434, or
the prospectus, in the form first filed with the SEC pursuant to SEC Rule
424(b), or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will reimburse each such Seller for any legal or other expenses reasonably
incurred by such Seller in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability or
action; provided, however, that Buyer will not be liable in any such case
if and to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished in writing by such Seller specifically for use in such
Registration Statement. For purposes of this Section 14.8(d), the term
"Registration Statement" shall include any final prospectus, exhibit,
supplement or amendment included in or relating to, and any document
incorporated by reference in, the Registration Statement referred to in
Section 14.8(a).
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(ii) Each Seller, severally and not jointly, will, to the extent
permitted by applicable law, indemnify and hold harmless Buyer, each
person, if any, who controls Buyer within the meaning of the
Securities Act, each officer of Buyer who signs the Registration
Statement and each director of Buyer, against all losses, claims,
damages or liabilities, joint or several, to which Buyer or such
officer or director may become subject under the Securities Act, the
Exchange Act or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written
consent of the Sellers), insofar as such loses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment or
supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse Buyer and each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that such Seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a
material fact made in reliance upon and in conformity with information
pertaining to such Seller furnished in writing to Buyer by such Seller
specifically for use in the Registration Statement; and provided
further, however, that the liability of each Seller hereunder shall
not in any event exceed the proceeds received from the sale of its
Shares and Warrant Shares covered by such Registration Statement.
(iii) Promptly after receipt by an indemnified party under this
Section 14.8(d) of notice of the threat or commencement of any action,
such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party under this Section 14.8(d),
promptly notify the indemnifying party in writing thereof; but the
omission to so notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained
in this Section 14.8(d) to the extent it is not prejudiced as a result
of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any
such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there may be a conflict between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such
action or that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of
notice from the indemnifying party to such indemnified party of its
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election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 14.8(d) for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (1) the
indemnified party shall have employed such counsel in connection with
the assumption of legal defenses in accordance with the proviso to the
preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by such indemnifying party in the case
of paragraph (i), representing all of the indemnified parties who are
parties to such action) or (2) the indemnified party shall not have
employed counsel reasonably satisfactory to the indemnifying party to
represent the indemnified party within a reasonable time after notice
of commencement of action, in each of which cases the reasonable fees
and expenses of counsel shall be at the expense of the indemnifying
party.
(iv) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either
(1) any indemnified party exercising rights under this Agreement makes
a claim for indemnification pursuant to this Section 14.8(d) but it is
judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that this
Section 14.8 provides for indemnification in such case, (2)
contribution under the Securities Act may be required on the part of
any such indemnified party in circumstances for which indemnification
is provided under this Section 14.8, or (3) the indemnification
provided for by this Section 14.8 is insufficient to hold harmless an
indemnified party, other than by reason of the exceptions provided
therein, then, and in each such case, Buyer and the Sellers will
contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) (x) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the
other or (y) if the allocation provided by clause (x) above is not
permitted by applicable law, or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such
proportion as is appropriate to reflect not only the relative fault
referred to in clause (x) above but also the relative benefits
received by the indemnifying party and the indemnified party from the
registration of the securities as well as the statements or omissions
which resulted in such losses, claims, damages or liabilities and any
other relevant equitable considerations. No Seller will be required to
contribute any amount in excess of the proceeds received from the sale
of its Shares and Warrant Shares covered by such Registration
Statement and no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
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The obligations of the Buyer and the Sellers under this Section 14.8(d)
shall survive completion of any offering of Shares or Warrant Shares pursuant to
a Registration Statement and the termination of Buyer's obligations under
Section 14.8(a). No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
15. Costs, Expenses, etc.
Each of the parties hereto shall bear all costs and expenses incurred by it
in connection with this Agreement and in the preparation for and consummation of
the transactions provided for herein, and shall not be entitled to any
reimbursement therefor from the other party.
16. Notice of Proceedings. Buyer or the Sellers, as the case may be, will
promptly notify the other in writing upon becoming aware of any order or decree
or any complaint praying for an order or decree restraining or enjoining the
consummation of this Agreement or the transactions contemplated hereunder, or
upon receiving any notice from any governmental department, court, agency or
commission of its intention to institute an investigation into, or institute a
suit or proceeding to restrain or enjoin the consummation of this Agreement or
such transactions, or to nullify or render ineffective this Agreement or such
transactions if consummated.
17. Notices. Any notice, request, demand or consent required or permitted
to be given under this Agreement shall be in writing and shall be effective when
(i) delivered personally, (ii) when mailed, first class, postage prepaid,
registered mail, return receipt requested, (iii) delivered by courier, or (iv)
sent by facsimile or e-mail (but only with respect to any party has specified an
e-mail address below) as follows:
(a) If to Buyer to:
Wire One Technologies, Inc.
225 Long Avenue
Hillside, New Jersey 07205
Facsimile: (973) 391-9776
E-mail: jbirkhahn@wireone.com
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
E-mail: ngold@fulbright.com
Attention: Neil Gold, Esq.
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(b) If to GEO, the Sellers, or any Seller, to:
GeoVideo Networks, Inc.
114 West 47th Street
22nd Floor
New York, New York 10036
Facsimile: (212) 282-0998
Attention: Peter Lee
Thomas Weisel Partners LLC
One Montgomery Street
San Francisco, California 94104
Facsimile: (415) 364-2697
E-mail: ddross@tweisel.com
Attention: Dan Dross
Crest Communications Holdings LLC
320 Park Avenue, 17th Floor
New York, New York 10022
Facsimile: (212) 317-2710
E-mail: jkuster@crestholdings.com; matt@crestholdings.com
Attention: James Kuster and Matthew O'Connell
East River Ventures L.P.
645 Madison Avenue, 22nd Floor
New York, New York 10022
Facsimile: (212) 644-5498
E-mail: arussell@eastriverventures.com
Attention: Andy Russell
Lucent Technologies, Inc.
New Ventures Group
600 Mountain Avenue
Murray Hill, New Jersey 07974
Facsimile: (908) 582-7480
E-mail: tuhlman@lucent.com
Attention: Thomas Uhlman
with a copy to:
Sills, Cummis, Radin, Tischman, Epstein & Gross
One Riverfront Plaza
Newark, New Jersey 07102
Facsimile: (973) 643-6091
E-mail: vboyajian@sillscummis.com
Attention: Victor Boyajian
or at such other address as a party shall specify by notice to the other
parties. Any written notice to any Former Employee shall be sent to such Former
Employee at the address set forth in such Former Employee's Former Employee
Representation Agreement or at such other address as such Former Employee shall
specify by notice to the parties hereto. Any written notice to any Other
Shareholder shall be sent to such Other Shareholder at the address set forth in
such Other Shareholder's Other Shareholder Representation Agreement or at such
other address as such Other Shareholder shall specify by notice to the parties
hereto.
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18. Headings and Entire Agreement. The section and subsection headings do
not constitute any part of this Agreement and are inserted herein for
convenience of reference only. This Agreement (including the Schedules and
Exhibits hereto), the Class A Warrants, the Class B Warrants, the Former
Employee Representation Agreements, the Purchaser Representative Agreements, the
Purchaser Representative Representation Letter and the Other Shareholder
Representation Agreements 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.
19. Public Announcements. Neither Buyer on the one hand nor GEO or any
Seller on the other shall make any press release or other public statement
concerning the matters covered by this Agreement without the approval of the
other party, except as in the opinion of counsel for the party making the
release or statement is required by law or applicable regulation, and shall, in
any event, to the extent practicable, permit the other party an opportunity to
review any such release or statement prior to dissemination.
20. Waiver. No waiver of a breach of, or default under, any provision of
this Agreement shall be deemed a waiver of such provision or of any subsequent
breach or default of the same or similar nature or of any other provision or
condition of this Agreement.
21. Binding Effect and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their successors and assigns.
Neither GEO nor the Sellers, on the one hand, nor Buyer, on the other, may
assign any obligation under this Agreement except with the prior written consent
of the other party hereto.
22. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one agreement.
23. Governing Law. This Agreement 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.
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24. 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
Agreement or the transactions contemplated hereby 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, each party has caused this Agreement to be duly
executed, sealed and delivered in its name and on its behalf, all as of the date
and year first above written.
WIRE ONE TECHNOLOGIES, INC.
By: ______________________________________
Name:
Title:
GEOVIDEO NETWORKS, INC.
By: ______________________________________
Name:
Title:
THOMAS WEISEL CAPITAL PARTNERS LLC
By: ______________________________________
Name:
Title:
CREST COMMUNICATIONS PARTNERS LP
By: ______________________________________
Name:
Title:
EAST RIVER VENTURES II L.P.
By: ______________________________________
Name:
Title:
LUCENT TECHNOLOGIES, INC.
By: ______________________________________
Name:
Title:
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