WAIVER AND SUPPLEMENTAL AGREEMENT
Exhibit
2.1
This
Waiver and Supplemental Agreement is made as of October 28, 2005, among Hands
On
Video Relay Services, Inc., Hands On Sign Language Services, Inc. (collectively
“Hands On”), Xxxxxx and Xxxxxx Xxxxx (collectively, the “Obrays”) and GoAmerica,
Inc. (“GoAmerica).
The
parties hereto agree as follows:
1.0 Background.
The
parties entered into an Agreement and Plan of Reorganization, dated as of
July
6, 2005 (the “Merger Agreement”). All capitalized terms used herein and not
otherwise defined have the meanings ascribed to them in the Merger Agreement.
Hands On has requested a waiver from GoAmerica from certain provisions of
the
Merger Agreement to allow Hands On to raise a limited amount of capital from
third-party sources through the issuance of new securities or the sale of
securities currently held by the Obrays (collectively, “Securities
Transactions”).
Both
GoAmerica and Hands On are prohibited under Section 5.2 of the Merger Agreement
from:
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taking
any action to solicit, initiate, encourage or support any inquiries
that
could lead to business deals with third parties, including mergers,
asset
sales, sales of capital stock or similar transactions;
or
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engaging
in any discussions or negotiations or providing
any information to any party regarding any these types of
transactions.
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Section
5.1 of the Merger Agreement provides that neither party may issue any securities
without the prior consent of the other party. Finally, Section 5.3 of the
Merger
Agreement provides that the Obrays will not transfer or sell any of their
interests in Hands On.
GoAmerica
is willing to grant Hands On and the Obrays a waiver from these provisions
of
the Merger Agreement on the terms described below and Hands and the Obrays
are
willing to grant GoAmerica a limited waiver from Section 5.2 on the terms
described below.
2.0 Terms
of Waiver.
2.1 GoAmerica
agrees that Hands On and the Obrays shall be permitted to raise up to $2.0
million (or, if GoAmerica consents, more than $2.0 million) through Securities
Transactions during the period from the date this Waiver and Supplemental
Agreement is signed through December 31, 2005, provided that if Hands On
and the
Obrays have a bona fide proposal for a Securities Transaction by December
31,
2005, the parties will agree to a reasonable extension of this date (consistent
with Merger closing by the Closing Date) to consummate such Securities
Transaction.
2.2 The
Securities Transactions will be subject to the following
conditions:
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Only
common stock, or securities that convert into common stock of Hands
On,
and then GoAmerica, automatically
upon closing of the Merger with GoAmerica, will be sold. No debt
or other
obligations resulting from the sale of these securities will be
outstanding following closing of the Merger.
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Purchasers
of these securities will be required as a condition to any sale
to agree
to vote in favor of the Merger with GoAmerica and to waive any
appraisal
rights which they may have so that the Obrays and the Purchasers
will, in
the aggregate, at all times hold sufficient shares of Hands On
to ensure
that the Merger will be approved by Hands On shareholders.
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2.3 The
funds
raised by the Securities Transactions will be used by Hands On and the Obrays
to
pay transactions expenses incurred by Hands On and the Obrays in connection
with
the Merger Agreement and the Merger and to pay other liabilities of Hands
On,
provided that as long as all outstanding transaction expenses and past due
liabilities of Hands On have been paid, Hands On shall continue to have the
right to make distributions to Target Shareholders if the provisions of Section
5.1(b) of the Merger Agreement have been met. The parties acknowledge that
Section 6.15 of the Merger Agreement provides that “whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expense.” To effectuate this provision, to the extent that any transaction
expenses of Hands On and the Obrays remain outstanding as of the Effective
Time
of the Merger, by operation of law, GoAmerica shall assume such transaction
expenses on the Closing Date, and the number of GoAmerica shares to be issued
in
the Merger will be reduced by a number of shares equal to (i) the product
of
multiplying the amount of such transaction expenses so assumed by GoAmerica
times 2.0, divided by (ii) the Average Closing Price.
2.4 The
Targets’ Working Capital Deficit described in the Merger Agreement shall be
calculated as of the Closing Date (rather than as of June 30, 2005).
Accordingly, all references in the Merger Agreement to the Targets' Working
Capital Deficit as of the date of the Merger Agreement shall be construed
to
mean the Targets Working Capital Deficit as of the Closing Date, and the
following terms in the Merger Agreement are hereby revised to read as
follows:
“Targets’
Working Capital Deficit Shares” shall mean the number of shares of Acquirer
Common Stock equal to (i) the amount of Targets’ Working Capital Deficit as of
the Closing Date (determined in accordance with the provisions contained
herein), divided by (ii) the Average Closing Price.
“Targets’
Working Capital Deficit” shall mean the amount by which the Targets’ Total
Current Liabilities exceed the Targets’ Total Currents Assets as of the Closing
Date.
“Targets’
Total Current Assets” shall mean all of the Targets’ current assets as
determined according to generally accepted accounting principles consistent
with
Targets’ past accounting practices, but excluding the note receivable from the
Shareholders’ Agent and any prepaid legal expenses incurred by Targets in
connection with the Merger, as set forth on the Closing Date Balance
Sheet.
“Targets’
Total Current Liabilities” shall mean all of the Targets’ current liabilities as
determined according to generally accepted accounting principles consistent
with
Targets’ past accounting practices, but excluding obligations under the VRS
Notes and obligations under that certain Short Term Loan Agreement previously
entered into by the Targets and Acquirer, as set forth on the Closing Date
Balance Sheet.
In
addition, a Closing Date Balance Sheet of the Targets shall be prepared by
Targets no later than 20 business days after the Closing Date, following
the
procedures (including, without limitation, the review procedure) described
in
Section 2.6(b) of the Merger Agreement with respect to the June 30 Balance
Sheet. Since the exact amount of GoAmerica shares to be issued in the Merger
cannot be calculated until the parties agree to the Closing Date Balance
Sheet
of the Targets, a new Section 10.11 is hereby added to the Merger Agreement
to
read as follows:
“10.11 Issuance
of Acquirer Common Stock.
Notwithstanding any other provision contained in this Agreement, twenty five
(25%) of the shares of Acquirer Common Stock to be issued to Xxx and Xxxxxx
Xxxxx in the Merger shall be delivered into escrow (the "Working Capital
Deficit
Escrow Shares") and shall not be released until the Closing Date Balance
Sheet
and, accordingly, the Targets’ Working Capital Deficit Shares, have been agreed
to by the parties or otherwise determined in accordance with Section 2.6
(b) of
the Merger Agreement.” Pending such determination, Xxx and Xxxxxx Xxxxx shall
enjoy all rights and benefits of ownership of the Working Capital Deficit
Escrow
Shares, including, without limitation, all voting rights.
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2.5 All
other
provisions in the Merger Agreement, including, without limitation, the
adjustment for the VRS Note Considerations Shares, shall remain unchanged
and in
full force and effect.
2.6 GoAmerica
and its representatives shall be permitted to contact, negotiate with and
provide information to (subject to a confidentiality agreement), the third
parties previously identified by GoAmerica to Hands On who have contacted
GoAmerica since July 6, 2005 for the purpose of exploring possible business
arrangements, provided that GoAmerica will apprise and involve in good faith
Xxxxxx Xxxxx. Hands On and its representatives shall be permitted to contact,
negotiate with and provide information to (subject to a confidentiality
agreement), third parties (other than those referred to in the immediately
preceding sentence) solely in connection with raising funds pursuant to
Securities Transactions in accordance with the terms of this Waiver and
Supplemental Agreement. Hands On will keep GoAmerica apprised of these
discussions and all material terms.
3.0 Capital
Expenditures.
GoAmerica will continue loaning funds to Hands On (up to an additional $650,000)
solely for capital expenditures on the terms set forth in the Short Term
Loan
Agreement previously entered into by the parties provided
that
upon
execution of this Waiver and Supplemental Agreement, (a) GoAmerica shall
issue
approximately $100,000 in payments to various Hands On creditors or vendors
specified by Hands On on or about the date of execution of this Waiver and
Supplemental Agreement, and (b) any future capital expenditure for which
Hands
On seeks funds under the Short Term Loan Agreement is discussed with GoAmerica
in advance of making any commitment, and GoAmerica agrees that the proposed
capital expenditure is consistent with the Business Plan being developed
jointly
by GoAmerica and Hands On, which agreement shall not be unreasonably withheld.
GoAmerica reserves the right to pay the vendors directly for these capital
expenditures.
4.0 GoAmerica
and Hands On Financial Information.
GoAmerica agrees to provide Hands On, and Hands On agrees to provide GoAmerica
with the following information promptly after such information becomes
available:
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the
consolidated financial statements of the other party as of and
for the
nine months ended September 30, 2005;
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to
the extent available, a P&L breakdown for the various business units
of each party;
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minutes
of all board meetings, and all board resolutions or written consents,
which have not been provided to the other party;
and
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a
copy of any agreement either party has with AOL regarding such
party’s new
IM service, which has not been provided to the other party.
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Notwithstanding
the foregoing, nothing herein shall limit or alter the parties' rights and
obligationspursuant to Section 6.5 of the Merger Agreement.
5.0 Closing
of the Merger.
The
parties agree to use their best efforts to close the Merger as soon as possible
(and in any event prior to January 31, 2006). Hands On and the Obrays agree
that
upon satisfaction of the conditions precedent to the Merger described in
the
Merger Agreement, they will consummate the Merger regardless of whether or
not
their fundraising efforts permitted by this Waiver and Supplement have been
successful.
6.0 Governing
Law.
This
Waiver and Supplemental Agreement shall be governed by and construed in
accordance with the internal laws of Delaware.
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IN
WITNESS WHEREOF the parties have signed this Waiver and Supplemental Agreement
as of the date first above written.
| HANDS ON VIDEO RELAY SERVICES, INC. | ||
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| By: | /s/ Xxxxxx Xxxxx | |
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| HANDS ON SIGN LANGUAGE SERVICES, INC. | ||
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| By: | /s/ Xxxxxx Xxxxx | |
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| /s/ Xxxxxx Xxxxx | ||
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Xxxxxx Xxxxx |
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| /s/ Xxxxxx Xxxxx | ||
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Xxxxxx Xxxxx |
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| GOAMERICA, INC. | ||
| By: | /s/ Xxxxxx X. Xxxx | |
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Xxxxxx X. Xxxx |
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| Chief Executive Officer | ||
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