Exhibit 2
---------
WARRANT AGREEMENT
Dated as of February 21, 2002
Issuer: ViryaNet Ltd. (the "Company")
Holder: GE Capital Equity Investments, Inc. ("GEE"), GE
Network Solutions ("GENS"), or its affiliates
(collectively "GE").
Issue: GE is hereby issued a warrant (the "Warrant") to
purchase 649,604 Ordinary Shares of the Company,
subject to the adjustment below. In the event that
at the Second Closing of the Agreement and Plan of
Merger (the "Merger Agreement") which is intended
to be executed among the Company, iMedeon, Inc.,
ViryaNet Acquisition Inc. and the stockholders
identified in such agreement, the Company shall
issue Additional Consideration Shares, then the
Warrant shall be adjusted and shall entitle GE to
purchase 672,230 Ordinary Shares of the Company.
The terms Second Closing and Additional
Consideration Shares shall have the meanings
ascribed to such terms in the Merger Agreement.
Exercise Price: |X| The exercise price per each Ordinary
Share shall be $US0.515.
Exercise Price Adjustment: |X| In the event that the Company issues its
Ordinary Shares in a single or series of
related capital raising transaction of
$3MM or greater for a price per Ordinary
Share which is lower than the exercise
price (the "Reduced Price") of the
Warrant, then the exercise price will be
adjusted to be equal to the Reduced
Price. For the avoidance of doubt, it is
understood that the above adjustment
shall be a one-time adjustment and that
the exercise price will not be subject to
further adjustments following the above
adjustment. Adjustments will also be made
for any stock dividends, splits,
combinations or the like.
Method of Exercise: |X| At the discretion of GE, either an
exercise for cash or an exercise by way
of a "cashless exercise" mechanism.
Term of Warrant |X| Warrant is exercisable immediately upon
issuance, in one or more parts.
|X| Warrant shall be exercisable for a period
of three (3) years from the date hereof.
|X| Warrant shall survive a sale of the
Company.
Treatment of Dividends: Warrant holder shall be entitled to receive
dividends issued (if issued) in respect of the
Ordinary Shares of the Company on an as exercised
basis.
Information Rights: Warrant holder shall have the right to receive all
public financial information relating to the
Company as it becomes available to the public.
Registration Rights: The Ordinary Shares to which the Warrant may be
exercised shall be deemed to be "Registrable
Securities" under the Registration Rights
Agreement to be entered into upon the closing of a
Merger Agreement and shall be subject to the
lock-up set forth in the Merger Agreement.
Fees and Expenses: Each party to pay own fees and expenses in
connection with the transaction.
Confidentiality: This Warrant Agreement shall not be disclosed
publicly or privately without the prior written
consent of both parties except to the extent
required by law.
Governing Law: New York.
Binding Effect: This Warrant Agreement shall be binding upon the
parties and in full force and effect as of the
date hereof. Without derogating from the above,
the parties undertake to negotiate in good faith a
more detailed form of warrant based upon the draft
provided to the Company provided by GE containing
the terms of this Warrant Agreement, which will
replace this Warrant Agreement, and shall take
best efforts to complete such negotiation and sign
such warrant by March 8, 2002.
IN WITNESS HEREOF, the parties have signed this Warrant Agreement as of February
21, 2002:
------------------- --------------------
ViryaNet, Limited GE Capital Equity Investments, Inc.
By:_____________ By:_____________
Its:______________ Its:______________
2
