EXHIBIT 99.3
CURIOUS STOCK AGREEMENT
THIS AGREEMENT, dated as of July 27, effective as of August 1, 1999,
is made by and among CHILDREN'S BROADCASTING CORPORATION, a Minnesota
corporation (referred to herein as "CBC"); HARMONY HOLDINGS, INC., a Delaware
corporation (referred to herein as "HHI"); and XXXXX XXXXXX; XXXXXXX XXXXX;
XXXXXXX XXXXXXX; AND XXXXX XXXXX , as individuals (collectively referred to
herein as "CP Management").
W I T N E S S E T H:
THAT, WHEREAS, contemporaneously herewith and incorporated herein, CP
Management, HHI, Curious Pictures Corporation ("Curious") and CBC have entered
into an agreement whereby CP Management agreed to sell, transfer and assign
their one (1) share of Curious Common Stock ("Curious Share") and their interest
in the Option and Share Transfer Agreement dated as of December 15, 1996 among
CP Management, Curious and HHI ("Option Agreement") to CBC, and CBC agreed to
purchase such Curious Share and the Option Agreement, and HHI consented to such
sale, transfer and assignment (the "Purchase Agreement");
WHEREAS, contemporaneously herewith and incorporated herein, each
member of CP Management has entered into five (5) year employment agreements
with Curious;
WHEREAS, as consideration for entering into the Purchase Agreement and
employment agreements, HHI is desirous of transferring certain shares of
Curious' common stock owned by HHI to members of CP Management; members of CP
Management are desirous of having certain put rights to such shares to CBC; and
CBC is desirous of having certain call rights to such shares on the terms and
conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing and the covenants,
representations and warranties hereinafter in this Agreement set forth, the
parties hereto hereby agree as follows:
1. CURIOUS SHARES.
1.1 RIGHT TO ACQUIRE. Subject to the provisions set forth
herein, the parties agree that on December 31, 1999 and each
year thereafter until December 31, 2003, each member
of CP Management will each receive the option to acquire 1
share which represents 1% of the issued and outstanding
common stock of Curious from HHI up to an aggregate of 5
shares per member. Such member shall provide HHI with
written notice of his/her right to receive such share(s) in
the form attached hereto and incorporated herein as Exhibit
A.
1.2 PUT AGREEMENT.
1.2.1 CP MANAGEMENT'S EMPLOYMENT AGREEMENTS. On December 31,
2002, provided that his/her employment agreement has not
been terminated pursuant to Section 5(a) or (b) of his/her
employment agreement, each member of CP Management shall
have the right to put 2 shares of Curious Common Stock to
CBC. On December 31, 2003, provided that his/her employment
agreement has not been terminated pursuant to Section 5(a)
or (b) of his/her employment agreement, each member of CP
Management shall have the right to put an additional 2
shares of Curious Stock to CBC. Each member shall have the
right to put his/her remaining 1 share of Curious common
stock to CBC on December 31, 2004 only in the event that the
member entered into an extension of his/her employment
agreement for a term of at least one (1) additional year
through December 31, 2004 and such member's employment
agreement was not terminated pursuant to Section 5(a) or
5(b) of that employment agreement. Each member shall provide
CBC with written notice in the form attached hereto and
incorporated herein as Exhibit B of his/her intent to put
such share(s) to CBC.
1.2.2 CP MANAGEMENT'S EMPLOYMENT IS TERMINATED UNDER SECTION
5(a). In the event a member of CP Management's employment is
terminated due to death of member under Section 5(a), the
estate of such member shall be entitled to put all of
member's 4 shares of the Curious common stock to CBC
immediately upon such termination, even if such amount had
not yet been earned at the time of termination. In the event
a member of CP Management's employment is terminated due to
disability and such member is not re-employed under Section
5(a) of his/her employment agreement, such member shall be
entitled to put all of his/her 4 shares of Curious common
stock to CBC on the first day of the thirteenth month
following such termination for disability, even if such
amount had not yet been earned at the time of termination.
1.2.3 CP MANAGEMENT'S EMPLOYMENT IS TERMINATED UNDER SECTION
5(b). In the event a member of CP Management's employment is
terminated under Section 5(b) of that member's employment
agreement, any and all put rights which that member may have
or may have been entitled to receive shall terminate upon
such termination.
1.2.4 CP MANAGEMENT'S EMPLOYMENT IS TERMINATED UNDER SECTION
5(c). In the event Curious terminates a member's employment
pursuant to Section 5(c) of that member's employment
agreement, that member shall be entitled to put all of
his/her 4 shares of the Curious common stock to CBC
immediately upon such termination, even if such amount had
not yet been earned at the time of termination by Curious.
1.2.5 PUT PRICE. The parties agree that the consideration
for each share put shall be $96,774 per share. Unless
otherwise terminated as set forth herein, CP Management
shall have until March 31, 2005 to exercise his/her put
rights.
1.3 CALL AGREEMENT. In the event a member of CP Management does
not put his/her shares to HHI by March 31, 2005, CBC shall
have the right to call such shares from CP Management at
anytime commencing after June 1, 2005. The parties agree
that the consideration for each share called shall be
$96,774 per share. CBC shall provide the members of CP
Management with written notice in the form attached hereto
and incorporated herein as Exhibit C of its intent to call
such share(s) from CP Management.
2. RESTRICTION ON TRANSFER. CBC and each member of CP Management hereby
agrees that for as long as this Agreement remains in effect, it/he/she
will not sell, transfer or otherwise dispose of (or enter into a
binding agreement to sell, transfer or otherwise dispose of) all or
any of its/his/her shares of or rights to acquire Curious common
stock, now owned or hereafter acquired (the "Shares") except in
compliance with this Agreement.
3. RIGHT OF CO-SALE. Except as hereinafter provided, each of the parties
hereto agrees that it/he/she will not sell, transfer or otherwise
dispose of any of the Shares or of any rights to acquire Shares unless
the other party hereto is given the right to participate as a seller
in such transaction on a pro rata basis as of the date of receipt of
written notice described in Section 8.3 of this Agreement. The
following sales, transfers or other disposals of Shares shall not be
covered by this right of co-sale:
(a) sales of Shares by any of the parties to this Agreement in a
bona fide underwritten public offering pursuant to a
registration statement filed by Curious under the Securities
Act of 1933;
(b) transfers or sales of a Share by a member of CP Management
pursuant to the exercise of such member of his/her right
require CBC to purchase such Share(s) pursuant to Section
1.2 of this Agreement, or transfers or sales of Shares to
CBC pursuant to CBC's exercise of its right to purchase any
Shares pursuant to Section 1.3 of this Agreement;
(c) sales or transfers by CBC to any parent or subsidiary of
CBC.
In the event of any distribution of the Shares to the public
shareholders of CBC, this Agreement shall cease to exist with respect to such
Shares after such distribution has been affected. The provisions of subsection
(a) above shall not apply to the members of CP Management during the period in
which CBC has the right to purchase the Shares from the members of CP Management
pursuant to Section 1.3 of this Agreement.
4. CO-SALE PROCEDURES. Each party to this Agreement to which the right of
co-sale provided in Section 3 of this Agreement applies shall give
prompt written notice to each other party to this Agreement in the
event it/he/she has a present intention to sell, transfer or otherwise
dispose
of any Shares in a transaction subject to the right of co-sale, and
each other party receiving such notice shall notify the party giving
the notice within fifteen (15) calender days following receipt of such
notice as to whether it wishes to participate in such transaction and
bear a pro rata portion of the expenses incident thereto, with all
negotiations leading to the consummation of such transaction to be
conducted thereafter by the party contemplating such sale. Failure to
respond to such notice within such 15 day period shall be deemed a
declination of any right to participate in such transaction, provided
that (i) such transaction is fully closed and consummated within 180
days of the expiration of such 15 day notice period; (ii) the terms of
the actual transaction include no fewer or greater number of Shares
than those set forth in such notice; and (iii) no purchasers or
ultimate legal or beneficial holders of the Shares are involved in the
transaction other than those disclosed in such notice. Failure to meet
any of the foregoing conditions shall require that a new notification
and right of co-sale with regard to such transaction under this
section.
5. LEGENDS AND STOP TRANSFER ORDERS.
(a) Legend Covering This Agreement. CBC and each member of CP
Management shall promptly add the following legend to each
of the certificates representing Shares heretofore or
hereafter issued to it/him/her and standing in its/his/her
name on the books of Curious and, so long as this Agreement
shall remain in full force and effect, it/he/she shall add
(and hereby directs Curious, as well as any transfer agent
appointed by Curious, to add) such legend to any and all
Shares issued to it/him/her, such legend to be and remain
upon such certificates, as well as any re-issuance thereof
unless and untl removed pursuant to Section 5(c) below:
"The securities represented by this certificate
are subject to certain transfer restrictions and
co-sale rights set forth in an agreement, dated
July 30, 1999, between the registered owner of
such securities and certain other persons, and may
not be sold, transferred or otherwise disposed of
except in compliance with the terms of such
agreement, a copy of which is available for
inspection in the principal office of the issuer
of such securities."
(b) Stop Transfer Order. A stop transfer order shall be placed
with Curious, as well as any transfer agent appointed by
Curious, preventing transfer of any of the securities
referred to in Section 5(a) pending compliance with the
conditions set forth in any such legend.
(c) Removal of Legends. Any legend endorsed on a certificate or
instrument evidencing a security subject to this Agreement
shall be removed, and Curious shall be authorized to issue a
certificate or instrument without such legend to the holder
of such security, if this Agreement has expired by its terms
or such security is being disposed of pursuant to the terms
of this Agreement in a transaction which upon completion
will leave the Shares free and clear of this Agreement, and,
in either event, the holder of such security provides
Curious and the other parties to this Agreement with an
opinion of counsel for such holder to such effect.
5. TERM OF AGREEEMENT. The co-sale rights of this Agreement shall
terminate and expire on
seventh anniversary of the date of this Agreement.
6. INDEMNIFICATION. Each party hereby indemnifies and agrees to hold
harmless the other parties from and against all claims, damages,
losses, liabilities, costs and expenses (including, without
limitation, settlement costs and any legal, accounting or other
expenses of investigating or defending any actions or threatened
actions) in connection with any breach of any representation,
warranty, covenant, agreement or obligation of such party contained in
this Agreement.
7. Each of the parties hereto expressly represents and warrants to each
other party that it/she/he has the full right, power, authority and
capacity, and is free, without restriction to enter into this
Agreement.
8. MISCELLANEOUS PROVISIONS.
8.1 EXECUTION OF DOCUMENTS. The parties agree to execute all
applications, documents and instruments which may be
reasonably necessary for the consummation of the
transactions contemplated hereunder, or which might be from
time to time reasonably requested by any party hereto in
connection therewith, whether before or after the date of
this Agreement.
8.2 CHANGES, WAIVERS, ETC. Neither this Agreement nor any
provision thereof may be changed, amended, waived,
discharged or terminated orally, but only in writing signed
by all parties to this Agreement.
8.3 NOTICES. All notices, requests, elections, demands and other
communications given pursuant to this Agreement shall be in
writing and shall be duly given when delivered personally or
by facsimile transmission (upon receipt of confirmation) or
when deposited in the mail, certified or registered mail,
postage prepaid, return receipt requested, and shall be
addressed as follows:
If to CBC:
Xx. Xxxxxxxxxxx X. Xxxx
Children's Broadcasting Corporation
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
with copy to:
Xxxx Xxxxx, Esq.
Children's Broadcasting Corporation
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
If to HHI:
Xx. Xxxxxxxxxxx X. Xxxx
Harmony Holdings, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
with copy to:
Xxxx Xxxxx, Esq.
Harmony Holdings, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
If to CP Management:
Xxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxx
c/o Curious Pictures Corporation
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
With copy to:
Xxxxx Xxxxxxxx, Esq.
XXXXXXXX, XXXXX & DEUTSCH, LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
8.4. EXHIBITS. All Exhibits referred to herein are incorporated
into this Agreement by reference for all purposes and shall
be deemed part of this Agreement.
8.5. ASSIGNABILITY. None of the parties may assign their rights
or obligations under this Agreement without the prior
written consent of the other parties which shall not be
unreasonably withheld or delayed, except that CBC, HHI and
Curious may make an assignment to a parent, subsidiary,
affiliate or successor of such party and each member of CP
Management may make an assignment to an entity that is
controlled by and 100% owned by such member.
8.6. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the xxxxxxxxxxxxxxx, xxxxx, xxxxxxx,
successors, and assigns of the parties hereto.
8.7. HEADING. The headings contained in this Agreement are for
reference only and shall not effect in any way the meaning
or interpretation of this Agreement.
8.8. COUNTERPARTS. This Agreement and any other instrument to be
signed by the parties hereto may be executed by the parties,
together or separately, in two or more identical
counterparts, each of which shall be deemed an original, but
all of which together shall constitute but one and the same
instrument.
8.9 CLAUSES SEVERABLE. The provisions of this Agreement are
severable. If any provision of this Agreement or the
application thereof to any person or circumstance is held
invalid, the provision or its application shall be modified
to the extent possible to reflect the expressed intent of
the parties but in any event, invalidity shall not affect
other provisions or applications of this Agreement which can
be given effect without the invalid provision or
application.
IN WITNESS WHEREOF, the parties hereto, by their properly authorized
representatives, have caused this Agreement to be executed as of the day and
date first above written.
CHILDREN'S BROADCASTING HARMONY HOLDINGS, INC.,
CORPORATION, a Minnesota corporation a Delaware corporation
By: /s/ Xxxxxxxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxxxxx
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Its: Chief Executive Officer Its: Chief Operating Officer
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CP MANAGEMENT
/s/ Xxxxxxx Xxxxx /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxx Xxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxx /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxx Xxxxx Xxxxxx
