TRANSFER AND SETTLEMENT AGREEMENT
This Transfer and Settlement Agreement (this "Agreement") is made
and entered into by Telecom Wireless Corporation, a Utah corporation ("TWC"),
and FlashNet Communications, Inc., a Texas corporation ("FlashNet"), on this
5th day of November, 1999. TWC and FlashNet hereby agree as follows:
1. BACKGROUND. TWC and FlashNet have entered into a Xxxx of Sale
and General Instrument and Conveyance, Transfer and Assignment (the "HLN Xxxx
of Sale"), dated September 23, 1999, pursuant to which, among other things,
TWC assigned to FlashNet all of TWC's rights in certain agreements for the
purchase of equity dated September 13, 1999, by and between TWC and Vision
Tek, L.P. and Hyperlight Network Corporation ("Hyperlight") and FlashNet
assumed TWC's obligations under such agreements arising after the date of the
HLN Xxxx of Sale. TWC and FlashNet also have entered into a non-binding
letter of intent (the "Letter of Intent") dated September 9, 1999, relating
to the possible merger of TWC into FlashNet. TWC desires to reacquire the
rights conveyed to FlashNet under the HLN Xxxx of Sale (the "Assigned
Rights") and TWC and FlashNet desire to terminate the HLN Xxxx of Sale and
affirm the termination of the Letter of Intent, all on the terms and
conditions set forth herein.
2. THE TRANSACTION. At the Closing (as hereinafter defined),
FlashNet shall, pursuant to a Xxxx of Sale and Assignment in the form set
forth as EXHIBIT A hereto, transfer, assign and convey to TWC all of its
right, title and interest in the Assigned Rights, without recourse,
representation or warranty of any kind except as expressly provided herein,
in exchange for the issuance and delivery by TWC to FlashNet of TWC's
Convertible Promissory Note in the principal amount of $700,000 (the "Note")
in the form set forth as EXHIBIT B hereto. TWC shall grant registration
rights to FlashNet with respect to the common stock of TWC issuable upon
conversion of the Note pursuant to a Registration Rights Agreement ("the
Registration Rights Agreement") in the form attached hereto as EXHIBIT C, and
TWC and FlashNet shall enter into a Mutual Release Agreement (the "Release
Agreement") in the form attached hereto as EXHIBIT D. This Agreement, the
Note, the Registration Rights Agreement and the Release Agreement are
sometimes referred to herein as the "Transaction Documents."
3. THE CLOSING. The consummation of the transaction contemplated
hereby shall take place at a closing (the "Closing") to be held on the date
hereof at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (or such other place and time as
shall be mutually agreed upon). At the Closing, each party hereto shall
execute and deliver to the other the Transaction Documents to which it is a
party. The execution and delivery by each party of the Transaction Documents
to which it is a party shall be a condition precedent to the obligation of
the other party to consummate the transactions contemplated hereby. No
Transaction Document shall become effective unless Hyperlight executes and
delivers to FlashNet a Mutual Release Agreement in the form attached hereto
as EXHIBIT E (the "HLN Release") prior to midnight, Texas time, on November
5, 1999 (the "Deadline"). If FlashNet does not receive an executed copy of
the HLN Release prior to the Deadline, the parties agree to treat the
Transaction Documents as if they had never been executed and delivered.
4. COVENANT TO PROVIDE COLLATERAL; FLASHNET NONDISCLOSURE. TWC
shall use its best efforts to obtain the consent of Hyperlight to enable TWC
to pledge all of TWC's equity interest in Hyperlight to FlashNet as
collateral to secure TWC's payment obligations under the Note. To this end,
TWC shall use its best efforts to renegotiate its existing agreements with
Hyperlight to, among other things, provide such collateral interest to
FlashNet. So long as (i) TWC is pursuing such renegotiation in good faith and
(ii) TWC has not breached, nor is in default of, any of its obligations to
FlashNet under the Transaction Documents, FlashNet agrees that it will not,
directly or indirectly, contact Hyperlight or any of its officers, directors,
employees or representatives or make any public announcement of its
relationship with or transactions involving Hyperlight, except to the extent
that any such disclosure is required by laws, rules, regulations, or orders
of any court or other governmental agency or entity applicable to FlashNet.
5. REPRESENTATIONS AND WARRANTIES OF TWC. TWC hereby represents and
warrants to FlashNet that:
(a) It has been duly incorporated and is validly existing and in
good standing under the laws of the State of Utah.
(b) It has duly authorized the execution, delivery and performance
of this Agreement and the other Transaction Documents. It has duly executed
and delivered this Agreement. This Agreement constitutes, and upon the
execution and delivery by it of the other Transaction Documents in accordance
with the terms hereof, the other Transaction Documents will constitute, valid
and legally binding agreements of it enforceable against it in accordance
with their terms, except as such enforceability may be limited by bankruptcy,
insolvency or other laws affecting generally the enforceability of creditors'
rights and by limitations on the availability of equitable remedies.
(c) Neither the execution and delivery by it of this Agreement or
the other Transaction Documents nor the consummation by it of the
transactions contemplated herein or therein will violate any provision of its
certificate of incorporation or bylaws or any statute, ordinance, regulation,
order, judgment or decree of any court or governmental agency applicable to
it, or conflict with or result in any breach of any of the terms of,
constitute a default under, or result in the termination of or the creation
of any lien pursuant to the terms of, any contract or agreement to which it
is a party or by which it or any of its assets is bound.
(d) No consent, approval or authorization from or filing or
declaration with any governmental agency or any other person or entity is
required of it in connection with the execution and delivery of this
Agreement and the other Transaction Documents or the performance of its
obligations hereunder or thereunder.
(e) The issuance of the shares of its common stock issuable upon
conversion of the Note has been duly authorized by it, and upon conversion of
the Note in accordance with the terms thereof, the shares of common stock of
it issued in connection therewith will be duly
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authorized, validly issued, and fully paid and non-assessable and free and
clear of the preemptive rights of any person or entity.
(f) It has full power and authority and has taken all required
action necessary to permit it to execute and deliver and to carry out the
terms of this Agreement and the other Transaction Documents.
6. REPRESENTATIONS AND WARRANTIES OF FLASHNET. FlashNet represents
and warrants to TWC that:
(a) It has been duly incorporated and is validly existing and in
good standing under the laws of the State of Texas.
(b) It has duly authorized the execution, delivery and performance
of this Agreement and the other Transaction Documents. It has duly executed
and delivered this Agreement. This Agreement constitutes, and upon the
execution and delivery by it of the other Transaction Documents in accordance
with the terms hereof, the other Transaction Documents will constitute, valid
and legally binding agreements of it enforceable against it in accordance
with their terms, except as such enforceability may be limited by bankruptcy,
insolvency or other laws affecting generally the enforceability of creditors'
rights and by limitations on the availability of equitable remedies.
(c) Neither the execution and delivery by it of this Agreement or
the other Transaction Documents nor the consummation by it of the
transactions contemplated herein or therein will violate any provision of its
certificate of incorporation or bylaws or any statute, ordinance, regulation,
order, judgment or decree of any court or governmental agency applicable to
it, or conflict with or result in any breach of any of the terms of,
constitute a default under, or result in the termination of or the creation
of any lien pursuant to the terms of, any contract or agreement to which it
is a party or by which it or any of its assets is bound.
(d) No consent, approval or authorization from or filing or
declaration with any governmental agency or any other person or entity is
required of it in connection with the execution and delivery of this
Agreement and the other Transaction Documents or the performance of its
obligations hereunder or thereunder.
(e) It has full power and authority and has taken all required
action necessary to permit it to execute and deliver and to carry out the
terms of this Agreement and the other Transaction Documents.
(f) It is its present intention to acquire the Note for its own
account and that the Note is being or will be acquired by it for the purpose
of investment and not with a view to distribution. It agrees that it will not
sell or transfer the Note without registration under applicable federal and
state securities laws, or the availability of exemptions therefrom. It agrees
that the Note will bear a restrictive legend stating that the Note has not
been registered under applicable federal and state securities laws and
referring to restrictions on its transferability and sale, and any other
legend required by applicable law or agreement.
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(g) It is an "accredited investor" within the meaning of Rule 501
under the Securities Act of 1933, as amended.
7. INDEMNIFICATION.
(a) TWC shall indemnify, defend and hold FlashNet harmless against
all liability, loss or damage, together with all reasonable costs and
expenses related thereto (including reasonable legal fees and expenses),
relating to or arising from (i) the untruth, inaccuracy or breach of any of
the representations, warranties or agreements of TWC contained in this
Agreement or the other Transaction Documents or (ii) the assertion by
Hyperlight of any claims or rights against FlashNet under the HLN Xxxx of
Sale or as a result thereof.
(b) FlashNet shall indemnify and hold TWC, its agents,
representatives, employees and directors harmless against all liability, loss
or damage, together with all reasonable costs and expenses related thereto
(including reasonable legal fees and expenses), relating to or arising from
the untruth, inaccuracy or breach of any of the representations, warranties
or agreements of FlashNet contained in this Agreement or the other
Transaction Documents.
8. AMENDMENTS, WAIVERS, ETC. This Agreement and the other
Transaction Documents may be amended and the provisions hereof and thereof
may be waived only by an instrument signed in writing by the party against
whom enforcement of such amendment or waiver is sought.
9. CHOICE OF LAW; JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO THE
RULES THEREOF RELATING TO CONFLICTS OF LAW. TWC HEREBY IRREVOCABLY SUBMITS
ITSELF TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN TARRANT
COUNTY, TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE
UPON IT IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
RELATIONSHIP BETWEEN FLASHNET AND TWC BY ANY MEANS ALLOWED UNDER STATE OR
FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN FLASHNET AND TWC SHALL BE
BROUGHT AND LITIGATED EXCLUSIVELY IN ANY ONE OF THE STATE OR FEDERAL COURTS
LOCATED IN TARRANT COUNTY, TEXAS HAVING JURISDICTION UNLESS FLASHNET SHALL
ELECT OTHERWISE. THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT, BY
WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING IS BROUGHT
IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER.
(b) EACH OF TWC AND FLASHNET HEREBY (i) IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT
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IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH; (ii)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE
OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS PARAGRAPH.
10. EXPENSES. Each of TWC and FlashNet shall bear its own costs and
expenses in connection with the negotiation, execution and delivery of the
Transaction Documents and the consummation of the transactions contemplated
thereby.
11. PARTIES IN INTEREST. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of, and be enforceable by, the
respective successors and assigns of the parties hereto. This Agreement shall
not run to the benefit of or be enforceable by any person other than a party
to this Agreement and its successors and assigns.
12. HEADINGS. The headings of the sections and paragraphs of this
Agreement have been inserted for convenience and reference only and do not
constitute a part of this Agreement.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and
shall constitute one and the same instrument.
14. NO OTHER AGREEMENTS. THIS AGREEMENT AND THE OTHER WRITTEN
AGREEMENTS DESCRIBED HEREIN AND DELIVERED IN CONNECTION HEREWITH REPRESENT
THE FINAL AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO MODIFICATION OR
AMENDMENT OF OR SUPPLEMENT TO THIS AGREEMENT OR TO ANY SUCH OTHER WRITTEN
AGREEMENT SHALL BE VALID OR EFFECTIVE UNLESS THE SAME IS IN WRITING AND
SIGNED BY THE PARTY AGAINST WHOM IT IS SOUGHT TO BE ENFORCED.
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IN WITNESS WHEREOF, the undersigned have executed this Transfer and
Settlement Agreement as of the date first above written.
COMPANY:
TELECOM WIRELESS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
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Title: CEO
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FLASHNET:
FLASHNET COMMUNICATIONS, INC.
By: /s/ M. Xxxxx Xxxxxx
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Name: M. Xxxxx Xxxxxx
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Title: CEO
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EXHIBITS OMITTED
