March 14, 2001
Re: Acquisition of WEBN
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This is the definitive agreement between The Educational Broadcasting Network
("WEBN"), and 5th Avenue Channel Corp. ("FAVE") regarding the acquisition of
WEBN. In this agreement, (i) WEBN and FAVE are sometimes called the "Parties".
PART ONE
The Parties desire to commence a definitive written agreement providing for the
acquisition of WEBN by FAVE (the "Definitive Agreement") as of March 14, 2001.
The execution of this Definitive Agreement is subject to the warranties and
representations made by WEBN, the approval of the Board of Directors and any and
all legal requirements by regulatory boards such as the Securities and Exchange
Commission.
The Definitive Agreement consists of the following terms and conditions:
1. TRANSACTION DESCRIPTION
The parties intend that WEBN will combine with the production division of FAVE,
named Net Video Networks or any other name approved by FAVE, for the purpose of
forming and growing a larger production division. It is intended that WEBN would
continue to market and sell the programming in the production division of FAVE.
The combined division will be responsible for all pre-production, production and
post-production of the shows. FAVE the parent company will take over all
accounting and non day-to-day administrative functions of WEBN.
2. ACQUISITION OF WEBN
The FAVE will directly acquire 100% of the shares of stock of WEBN in exchange
for $5,000 cash and 50,000 grant of restricted shares, 25,000 upon signing and
25,000 a year later based on performance of one million dollars ($1,000,000) in
total sales volume. FAVE will pay down WEBN's accounts payables represented to
be approximately $23,000, plus any additional monies loaned to the company by
Xxxxx Xxxxx, such payment to Xxxxx Xxxxx will be conditional on promised
performance and realization of accounts receivables as estimated. $5,000 will be
paid toward Xxxxx'x loan when the receivables are collected from Harley Davidson
University agreement and the Sanofi-Synthetics agreement, the final payment of
the loan in the amount of $10,000 will be paid to Xxxxx upon the receipt of the
second payment of the Sanofi-Synthetics agreement or the receipt of any other
agreement in which the receivable is in excess of $30,000.
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3. EMPLOYMENT AND NON-COMPETITION AGREEMENTS
WEBN will seek to combine its business operations with FAVE's to reduce
duplicative expenses and consolidate. The surviving production division will be
Net Video Networks or any other name agreed to by the FAVE.
Upon the acquisition of WEBN and FAVE, the following employment and
non-competition agreements would be executed:
a) Xxxxx Xxxxx, "Xxxxx" would enter into a one (1) year employment
agreement (the "Xxxxx Employment Agreement") with a one (1) year option to renew
under which Xxxxx would agree to serve as President/ Executive Producer of the
production division. The Xxxxx Employment Agreement would provide for such other
benefits and would contain such other terms as are ordinary or customary for the
other senior executives of FAVE, including but not limited to 10,000 stock
options per month for a capped amount of 120,000 stock options per year based on
selling in excess of one million dollars in total sales volume. In the case that
Xxxxx sells in excess of two million in total sales volume and accrues
additional stock options, those options will accrue to the following year and
will only be exercisable during the following year. A weekly compensation of
$500 salary + $500 draw against commission in addition to benefits, repayment of
loans and incentives will be paid to Xxxxx. Such compensation shall increase
after 60 days to $1,000 salary + $700 draw, after 120 days $1,000 salary +
$1,000 draw, after 180 days 1,000 salary + $1,200 draw, all increases are based
upon performance as agreed to and reviewed by FAVE management. In addition to
regular compensation, Xxxxx will receive a 5% commission on sales funds
collected accruing $250,000 in total sales volume, and will receive an
additional 5% on increases in total sales volume that exceed an incremental
amount of $250,000. For example, 5% will be paid on $ $250,000 in total sales
and 5% will be paid at the total sale amount of $500,000 on the increased
incremental amount of $250,000, and 5% will be paid at the total sale amount of
$750,000 on the increased incremental amount of $250,000.
b) b) Xxxxxx Xxxxxxx, "Zerring" would enter into a one (1) year employment
agreement (the "Zerring Employment Agreement") with a one (1) year option to
renew under which Xxxxxxx would agree to serve as Vice President of Operations
Distributions of the production division. The Zerring Employment Agreement would
provide for such other benefits and would contain such other terms as are
ordinary or customary for the other senior executives of FAVE, including but not
limited to 10,000 stock options per month for a capped amount of 120,000 stock
options per year based on selling in excess of one million dollars in total
sales volume. In the case that Xxxxxxx sells in excess of two million in total
sales volume and accrues additional stock options those options will accrue to
the following year and will only be exercisable during the following year. A
weekly compensation of $500 salary + $500 draw against commission in addition to
benefits and incentives will be paid to Zerring. Such compensation shall
increase after 60 days to $1,000 salary + $700 draw, after 120 days $1,000
salary + $1,000 draw, after 180 days 1,000 salary + $1,200 draw, all increases
are based upon performance as agreed to and reviewed by FAVE management. In
addition to regular compensation, Zerring will receive a 5% commission on sales
accruing $250,000 in total sales volume, and will receive an additional 5% on
increases in total sales
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volume that exceed the amount of $250,000. For example, 5% will be paid on $
$250,000 in total sales and 5% will be paid at the total sale amount of $500,000
on the increased incremental amount of $250,000, and 5% will be paid at the
total sale amount of $750,000 on the increased incremental amount of $250,000.
4. CORPORATE GOVERNANCE
One executive of WEBN at WEBN's election will be entitled to a seat on the Board
of Directors of FAVE subject to the vote and approval of the current Board of
Directors of FAVE.
PART TWO
The following paragraphs of this agreement in addition to the preceding
paragraphs (the "Binding Provisions") are legally binding and enforceable
agreements of the Parties.
1. ACCESS
During the period from the date this agreement is signed by both parties (the
"Signing Date") until the date on which either Party provides the other Party
with written notice that the terms of the Definitive Agreement are terminated
(the "Termination Date"), WEBN, shall afford FAVE full and free access to its
company and the personnel, properties, contracts, books and records, and all
other documents and data.
2. CONDUCT OF BUSINESS
During the period from the Signing Date until the Termination Date, the WEBN
shall each operate their businesses in the ordinary course.
3. CONFIDENTIALITY
Except as and to the extent required by law, neither Party will disclose or use,
and will direct its representatives not to disclose or use to the detriment of
the other Party, any Confidential Information (as defined below) with respect to
the other Party which is furnished, or which is to be furnished by the other
Party or their respective representatives to such Party or its representatives
at any time or in any manner other than in connection with its evaluation of the
transaction proposed in this letter. For purposes of this paragraph,
"Confidential Information" means any information concerning a Party which is
stamped "confidential" or identified in writing as such to the receiver of the
information from the provider of the information at the time of or promptly
following its disclosure unless, (i) such information is already known to the
receiver of the information or its representatives or to others not bound by a
duty of confidentiality or such information becomes publicly available through
no fault of the receiver of the information or its representatives, (ii) the use
of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Reorganization or (iii) the furnishing or use of such information is required by
or necessary or appropriate in connection with legal proceedings. Upon the
written request of either Party, the receiver of any Confidential Information
will promptly
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return such information to the provider of the Confidential Information or
destroy any Confidential Information in its possession and certify in writing to
the provider of the Confidential Information that it has done so.
4. DISCLOSURE
Except as and to the extent required by law, without the prior written consent
of FAVE, WEBN will direct its representatives not to make, directly or
indirectly, any public comment, statement, or communication with respect to, or
otherwise to disclose or to permit the disclosure of the existence of
discussions regarding the acquisition of WEBN or any of the terms, conditions,
or other aspects of the transaction in this agreement. If a WEBN is required by
law to make such a disclosure, it must first provide to FAVE the content of the
proposed disclosure, the reasons that such disclosure is required by law, and
the time and place that the disclosure will be made. In the event that WEBN
determines to make a public comment, statement, or communication concerning the
acquisition of WEBN, the form and content of such public comment, statement or
communication shall be approved by FAVE.
5. ENTIRE AGREEMENT
The Binding Provisions constitute the entire agreement between the Parties and
supersede all prior oral or written agreements, understanding, representations,
and warranties, and courses of conduct and dealing between the Parties on the
subject matter hereof. Except as otherwise provided herein, the Binding
Provisions may be amended or modified only in writing executed by all the
Parties.
6. GOVERNING LAW
The Binding Provisions will be governed by the construed under the laws of the
State of Florida.
7. COUNTERPARTS
This letter may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this letter and all of which, when taken
together, will be deemed to constitute one and the same agreement.
8. PRESUMPTIONS
In resolving any dispute or construing any provision hereunder, there shall be
no presumptions made or inferences drawn (i) because the attorneys for one of
the parties drafted the agreement, (ii) because of the drafting history of the
agreement; or (iii) because of the inclusion of a provision not contained in a
prior draft, or the deletion contained in a prior draft.
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9. REPRESENTATIONS BY SELLER
WEBN warrants and represents the following:
a. WEBN is the owner of and has good and marketable title to WEBN,
free from all liabilities, liens, and any and all other
encumbrances.
b. WEBN holds the ownership rights to WEBN and owns all common stock
in WEBN including but not limited to any and all licenses.
c. To WEBN's knowledge, WEBN has complied with all laws, rules, and
regulations of the city, state, and federal governments.
d. WEBN has paid all applicable social security, withholding, sales,
and unemployment insurance taxes to the city, state, and federal
governments to date.
e. WEBN has entered into no contract to sell, or license WEBN, or
any portion thereof.
f. WEBN has entered into no contracts relating to WEBN.
g. There are no judgments, liens, actions, or proceedings pending
against WEBN in any court.
10. COVENANTS OF WEBN
WEBN covenants with FAVE as follows:
a. This agreement will constitute the bill of sale and
instruments of assignment for the completion of the purchase
and transfer of all of the assets of WEBN free of all
encumbrances, and will contain the usual warranties and
ownership rights.
b. The business of WEBN up to the date of this agreement has
been conducted in accordance with all laws, rules, and
regulations of the city, state, and federal governments.
c. All applicable social security, withholding, sales, and
unemployment insurance taxes to the city, state, and federal
governments have been paid up to the date of this agreement.
d. At the time of the signing of this agreement, WEBN warrants
that the company has no creditors including no liabilities
for federal, state, and/or local taxes.
e. No judgments or liens are outstanding at the time of the
signing of this agreement, against WEBN.
f. WEBN, up to the date of the signing of this agreement, will
operate and maintain WEBN. In the regular course, will not
violate the terms of any contracts, assignments or licenses
connected with the business, and will convey and deliver to
FAVE all rights, title and interest to such agreements, and
business of WEBN.
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11. TERMINATION
In the event that any of the information received from WEBN to FAVE is
misrepresented, inaccurate, false or misleading, FAVE shall have the right to
immediately terminate this agreement upon 5 days written notice to WEBN.
12. NO RELIANCE.
No party hereto has relied on any statement, representation or promise of any
other party or with any other officer, agent, employee or attorney for the other
party in executing this Agreement except as expressly stated herein.
If you are in agreement with the foregoing, please sign and return one copy of
this letter agreement, which thereupon will constitute our agreement with
respect to its subject matter.
Sincerely,
5TH AVENUE CHANNEL CORP.
By: /s/ XXXX XXXXXXXXX
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Xxxx Xxxxxxxxx
Executive Vice President
Xxxx executed and agreed as to the Binding Provisions on DATE March 14, 2001.
The Educational Broadcasting Network
(WEBN)
By: /s/ XXXXX XXXXX
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Xxxxx Xxxxx
President
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APPROXIMATE MONTHLY BUDGET WEBN - 3/14/01
PAYROLL: XXXXX........$1,000
XXXXXXX......$1,000
XXXXXXX......$1,000
LEA..........$ 800
XXXXXX.......$ 500
XXXXXXX......$ 300
HAL..........$ 300
TOTAL PAYROLL - $4,900 WEEKLY................- MONTH...........$19,600
RENT...........................................................$ 3,180
TELEPHONE......................................................$ 2,000
FPL............................................................$ 350
FED-EX/DHL.....................................................AIRBORNE
OFFICE SUPPLIES................................................$ 500
DOT COM URL'S..................................................$ 50
MISC...........................................................$ 500
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MONTHLY TTL $27,680
STUDIO SHOOT - 12TH EACH MONTH.................................$352.50
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WEBN-INVENTORY FEB. '01
19 STATIONS PLUS CONSOLE MACROTEL PHONE SYSTEM
18 LINES PLUS FEATURES PLUS FULL VOICE MAIL
1 RCA 19" COLOR T.V.
1 JVC VHS
9 PEDESTAL DESKS
9 DESK CHAIRS
7 TORCH LAMPS
4 DESK LAMPS
2 FREE STANDING COMPUTOR STATION DESKS
1 COMPAQ 700 MHZ CPU
1 VIEW SONIC 17" MONITOR
6 APPOLLO (HP) COLOR PRINTERS
1 HP 992C HIGH SPEED COLOR PRINTER
1 XXXXXX FAX MACHINE
1 BROTHERS HIGH SPEED FAX WITH MEMORY
VARIOUS OFFICE SUPPLIES
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