EXHIBIT 99.2
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 ___,
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
