ASSIGNMENT AND SUBSCRIPTION AGREEMENT
Madison E, Priest, in consideration of the receipt of $400,000 and
other good and valuable consideration as set forth in paragraph 3, below, and
described elsewhere herein, hereby assigns, conveys, and transfers to Telecom
Wireless Corporation ("TWC") that portion of his interest in VisionTek, L.P.,
a dissolved Delaware limited partnership in liquidation ("VTLP"), equal to 2%
of 100% of the liquidating distribution of VTLP.
Xx. Xxxxxx and TWC both understand that VTLP is in liquidation, that
Xxxxx X. Xxxxxx (Xx. Xxxxxx'x wife) is the liquidator of VTLP, and that VTLP
will be assigning its intellectual property, personal property, and other
assets, subject to its liabilities (including litigation pending in various
courts with Level One Corporation and Zekko Corporation), to HLN Network
Corporation, a Delaware corporation ("HLN") in consideration of 2,500 shares
of Series B Common Stock of HLN. It is also the understanding of Xx. Xxxxxx
and TWC that HLN will distribute the Series B Common Stock to the partners of
VTLP in accordance with their interests in liquidating distributions.
1. To induce TWC to enter into this assignment and subscription
agreement, Xx. Xxxxxx represents and warrants to TWC as follows:
a. Xx. Xxxxxx owns the interest in VTLP being assigned
to TWC free and clear of all encumbrances, liens, and
other liabilities.
b. Xx. Xxxxxx has the legal capacity to assign his
interest in VTLP and his future interest in HLN,
subject only to the approval of the liquidator of
VTLP and the Board of Directors of HLN.
c. Xx. Xxxxxx did not encounter TWC through any form of
public advertising or general solicitation.
d. The interest in VTLP being assigned hereby will
entitle TWC to a distribution of 50 shares of Series
B Common Stock of HLN when such shares are
distributed to the partners of VTLP by the
liquidator. To the extent this interest results in
fewer than 50 shares, Xx. Xxxxxx will assign
additional shares to TWC; to the extent this interest
results in greater than 50 shares, Xx. Xxxxxx retains
such shares.
2. To induce Xx. Xxxxxx to enter into this assignment and
subscription agreement, TWC represents and warrants to Xx. Xxxxxx as follows,
with TWC's understanding and agreement that VTLP and HLN will each rely on
these representations and warranties as though the representations and
warranties were made directly to HLN and VTLP:
a. TWC understands that an investment in VTLP and
(following the liquidating distribution) HLN is one
of high risk, and a significant possibility exists
that TWC
PRIEST-TELECOM WIRELESS CORPORATION ASSIGNMENT AND SUBSCRIPTION AGREEMENT PAGE 2
may lose his entire investment. Without limiting the
generality of the foregoing, TWC specifically
understands that:
The proceeds to be received from TWC will
not be sufficient for HLN to accomplish its corporate
objectives as outlined in the due diligence
information received by TWC.
The ownership of the intellectual property
that forms the basis for the Technology owned by VTLP
(which will be assigned to HLN) is primarily with
VTLP, but also is possibly with certain individuals
including, without limitation, Xx. Xxxxxx, Xxx.
Xxxxxx, and J. Xxxx Xxxxxx. TWC understands that,
although these persons have agreed to assign their
interests in the intellectual property, the
Technology, and the other assets of VTLP, they have
not yet done so.
HLN has entered or will shortly enter into
an agreement by which an unaffiliated entity by which
that entity will have an option to acquire 817 shares
of Series A Preferred Stock to be issued by HLN for a
total investment of $8,170,000, a portion of which
investment will include the reimbursement of expenses
previously incurred by such entity. That entity will
also obtain an option to enter into an exclusive
manufacturing agreement for the broadband
communications units, as well as obtaining certain
marketing rights. The Series A Preferred Stock will
be created with voting rights, liquidation and
dividend rights, and other rights and preferences
which will be senior to the Series B Common Stock.
HLN can offer no assurance that its
technology will ever result in a broadband
communications unit of the type witnessed by
representatives of TWC becoming available
commercially or, if it becomes commercially
available, that it will become a commercial success.
The Series B Common Stock has been
authorized pursuant to a certificate of designation
filed with the Delaware Secretary of State and which
TWC has reviewed to the extent it has determined such
review to be necessary or appropriate.
The interest in VTLP is subject to the
provisions and restrictions contained in the limited
partnership agreement for VTLP, which TWC has
reviewed to the extent it has determined such review
to be necessary or appropriate.
HLN is in the process of negotiating certain
compensation arrangements with four persons
(including Xx. Xxxxxx) who are, and who will continue
to be, key employees of HLN. TWC will not be required
to approve such compensation arrangements.
PRIEST-TELECOM WIRELESS CORPORATION ASSIGNMENT AND SUBSCRIPTION AGREEMENT PAGE 3
As you have been previously advised, VTLP is
involved in certain litigation involving its
intellectual property which is in the preliminary
stages and, although VTLP and HLN believe they have
good claims and meritorious defenses, there can be no
assurance with regard to the possible outcome of the
litigation.
TWC has received a significant amount of
information, and has the right to continue to ask for
and obtain further information regarding the
foregoing or any other information about VTLP and HLN
which TWC deems to be relevant to its decision to
subscribe to purchase the interests being offered
hereby.
b. The interest in VTLP, and the shares of Series B
Common Stock of HLN to be distributed upon the
liquidation of VTLP are being and will be acquired by
TWC for his own account and not on behalf of any
other person or entity. The Securities are being
acquired for investment purposes and not for resale
or distribution.
CAVEAT: CERTAIN STATEMENTS CONTAINED HEREIN AND WHICH HAVE BEEN GIVEN TO TWC IN
OTHER DOCUMENTS USING THE TERMS "MAY", "EXPECTS TO", AND OTHER TERMS DENOTING
FUTURE POSSIBILITIES, ARE FORWARD-LOOKING STATEMENTS. THE ACCURACY OF THESE
STATEMENTS CANNOT BE GUARANTEED AS THEY ARE SUBJECT TO A VARIETY OF RISKS WHICH
ARE BEYOND VTLP'S OR HLN'S ABILITY TO PREDICT OR CONTROL. THESE RISKS MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE PROJECTIONS OR ESTIMATES CONTAINED
IN THIS REPORT. THESE RISKS INCLUDE, BUT ARE NOT LIMITED TO, THE POSSIBILITY
THAT THE DESCRIBED OPERATIONS OR OTHER ACTIVITIES WILL NOT BE COMPLETED ON
ECONOMIC TERMS, IF AT ALL. THE OPERATIONS CONTEMPLATED BY HLN FOLLOWING THE
LIQUIDATION OF VTLP ARE ATTENDANT WITH HIGH RISK. THERE CAN BE NO ASSURANCE THAT
HLN WILL SUCCEED IN OPERATING THE CONTEMPLATED BUSINESS, AND IT IS IMPORTANT
THAT EACH PERSON CONSIDERING AND INVESTMENT PURSUANT TO THIS SUBSCRIPTION
AGREEMENT UNDERSTANDS THE SIGNIFICANT RISKS WHICH ACCOMPANY THE PROPOSED CONDUCT
OF HLN'S FUTURE OPERATIONS.
c. Neither Xx. Xxxxxx nor TWC is aware of the payment of
any commission or other remuneration to any person in
connection with the execution of this assignment to
acquire interests of VTLP from T,&. Priest, or the
purchase of the Series B Common Stock.
d. TWC acknowledges receipt of documents defining the
Series B Common Stock and such additional information
disclosing the business, financial condition, and
management of VTLP and HLN, as it has deemed
necessary or appropriate for the purposes of
considering this investment.
PRIEST-TELECOM WIRELESS CORPORATION ASSIGNMENT AND SUBSCRIPTION AGREEMENT PAGE 4
e. HLN and the liquidator for VTLP have each given TWC
the opportunity to ask questions of and to receive
answers from persons acting on their behalf
concerning the terms and conditions of this
transaction and the opportunity to obtain any
additional information regarding VTLP, HLN, its
respective business and financial condition which HLN
or VTLP possesses or can acquire without unreasonable
effort or expense including (without limitation) all
minutes of meetings of the Board of Directors of HLN
or committees thereof, and other relevant documents
requested by TWC. In addition, TWC has made such
other financial or other inquiry as TWC deems
necessary or appropriate in the conduct of TWC'S due
diligence investigation and has not relied on due
diligence of any other party in connection herewith.
f. TWC acknowledges and understands, however, that
neither VTLP nor its liquidator, nor HLN has
authorized any person to make any statements on its
behalf which would in any way contradict any of the
information which VTLP or HLN has provided to TWC in
writing, including the information set forth in this
Subscription Agreement, and TWC further represents to
Xx. Xxxxxx, HLN and VTLP that TWC has not relied upon
any such representations regarding HLN, VTLP, its
respective business or financial condition, or this
transaction in making any decision to acquire
interests in VTLP and, upon distribution, the Series
B Common Stock. If TWC becomes aware of conflicting
information, TWC will discuss this with management of
HLN and the liquidator of VTLP.
g. TWC'S present financial condition is such that it is
unlikely that it would be necessary for TWC to
dispose of or leverage either his interest in VTLP or
the Series B Common Stock when received upon
distribution from VTLP, in the foreseeable future.
h. TWC acknowledges and understands that there is no
market for the interests in VTLP or for any class of
HLN's capital stock and there can be no assurance
that any such market will ever develop.
i. TWC understands that the interests in VTLP being
acquired hereby are, and the shares of Series B
Common Stock will be and will continue to be
restricted securities within the meaning of Rule 144
of the General Rules and Regulations promulgated
under the Securities Act of 1933, as amended (the
"Act"), and applicable state statutes, and consents
to the placement of an appropriate restrictive legend
or legends on any certificates evidencing the
Securities and any certificates issued in replacement
or exchange therefor and acknowledges that VTLP and
HLN, as appropriate, will cause its stock transfer
records to note such restrictions.
PRIEST-TELECOM WIRELESS CORPORATION ASSIGNMENT AND SUBSCRIPTION AGREEMENT PAGE 5
j. TWC understands that the Series B Common Stock which
will be acquired on receipt of a liquidating
distribution from HLN will be subject to the
following co- sale rights and rights of first
refusal:
Each holder of outstanding equity securities of HLN
has (and by executing this Subscription Agreement TWC
specifically grants) a right of first refusal with
respect to any transfer by it of any shares of any
class or series of equity securities of HLN. In
addition, any person seeking to purchase shares of
any class or series of equity security from TWC must
offer and be prepared to purchase all shares held by
all other holders of equity securities on the same
price and terms. The foregoing rights will expire
upon the completion of an initial public offering by
HLN. The following transactions are specifically
excepted from the foregoing provision:
(i) Transfers of shares for estate planning
purposes; and
(ii) Transfers of common stock by a shareholder
which aggregate less than 1% of the total
number of shares of common stock outstanding
during any twelve month period unless
transfer of a larger amount has been
approved by the Board of Directors of HLN.
k. TWC agrees to disclose to any proposed buyer or
transferee of the Series B Common Stock the
restrictions relating to the sale or transfer of the
Securities being purchased hereby.
l. By TWC's execution below, it is acknowledged and
understood that VTLP and HLN, and each of them and
their respective officers, directors, and liquidator,
is and are relying upon the accuracy and completeness
hereof in complying with certain obligations under
applicable securities laws.
m. TWC has reviewed the terms of this Subscription
Agreement and all of the documents attached hereto,
delivered in connection herewith or otherwise
referenced herein with its legal, investment, tax,
and financial advisors to the extent TWC deems such
consultation appropriate, and TWC has also consulted
with such advisors with regard to the advisability of
this investment to the extent TWC deems such
consultation to be appropriate. TWC acknowledges that
VTLP and HLN has each advised TWC that it recommends
that TWC obtain such advice and consultation. TWC
further acknowledges that it has neither sought nor
received any advice from HLN or VTLP, or any of their
respective agents or affiliates with respect to any
aspect of this Assignment and Subscription Agreement
or the Investment under this Assignment and
Subscription Agreement.
n. TWC acknowledges that an investment in VTLP and in
the Series B Common Stock of HLN is a suitable
investment for it, taking into consideration the
significant risks
PRIEST-TELECOM WIRELESS CORPORATION ASSIGNMENT AND SUBSCRIPTION AGREEMENT PAGE 6
associated with their business, the restrictions on
transferability and the other considerations
affecting VTLP and the Series B Common Stock and HLN
as described herein and in the documents referenced
herein, and in the investigation that TWC has made.
3. This Agreement may be amended or modified only in writing
signed by the parties hereto. No evidence shall be admissible
in any court concerning any alleged oral amendment hereof This
Agreement fully integrates all prior agreements and
understandings between the parties concerning its subject
matter.
4. This Agreement binds and inures to the benefit of the
representatives, successors and permitted assigns of the
respective parties hereto.
5. Each party hereto agrees for itself, its successors and its
permitted assigns to execute any and all instruments necessary
for the fulfillment of the terms of this Agreement.
6. This Agreement is made under, shall be construed in accordance
with and shall be governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, subject to acceptance by the liquidator for VTLP
and HLN, the undersigned has completed this Assignment and Subscription
Agreement and tendered payment as set forth above to evidence the undersigned's
commitment to purchase the Securities as set forth above.
TELECOM WIRELESS CORPORATION
Date: 9/13 , 1999
---------------
SSN: By: /s/ Xxxxx X. Xxxxxxx
------------------------------- -------------------------------------
Xxxxx X. Xxxxxxx, Ph.D., President
0000 XXX Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
SUBSCRIPTION ACCEPTED SUBJECT TO THE TERMS HEREOF.
HYPERLIGHT NETWORK CORPORATION
9/13 , 1999 By /s/ J. Xxxx Xxxxxx
----------------- --------------------------------------
J. Xxxx Xxxxxx, President
VISION TEK, X.X.
XXXXXX-TELECOM WIRELESS CORPORATION ASSIGNMENT AND SUBSCRIPTION AGREEMENT PAGE 7
By:
-------------------------------------
Xxxxx X. Xxxxxx, Liquidator
PRIEST-TELECOM WIRELESS CORPORATION ASSIGNMENT AND SUBSCRIPTION AGREEMENT PAGE 8
