Exhibit 10.13
AGREEMENT ESTABLISHING STRATEGIC RELATIONSHIP
BETWEEN
XXXXXX.XXX, INC. ("XXXXXX.XXX")
AND
HISPANIC TELEVISION NETWORK, INC. ("HTVN")
March 15, 2000
WHEREAS, the mission of Xxxxxx.xxx is to become central to the lives of
young Latinos by providing integrated services and access to state-of-the-art
world wide web technology, which will empower and facilitate the development of
the Latin community;
WHEREAS, HTVN is a leading U.S. provider of Latino television
programming, media production and syndication services;
WHEREAS, Xxxxxx.xxx desires to enter into a strategic relationship with
HTVN for the purpose of becoming the leading provider of web services and
commerce for young Latinos in the U.S. and in Latin America; and
WHEREAS, HTVN desires to enter into a strategic relationship with
Xxxxxx.xxx for the purpose of establishing a leading Internet presence.
NOW, THEREFORE, the parties hereto agree as follows:
1. ISSUANCE OF XXXXXX.XXX, SERIES B PREFERRED STOCK. The strategic
relationship will be consummated at a Closing, at which, among other things,
Xxxxxx.xxx. will issue and sell to HTVN, and HTVN will purchase, 7,800,000
shares of Xxxxxx.xxx Series B Preferred Stock (the "XXXXXX.XXX SHARES"), having
the rights preferences and privileges summarized in EXHIBIT A attached hereto,
in exchange for the following considerations that the parties agree has a total
value of approximately $36,036,000, for $4.62 per share:
o The transfer to Xxxxxx.xxx of a minority equity interest in ten (10)
of HTVN's Television Stations, subject to conditional repurchase, as
more particularly described below in Sections 2 and 4 below;
o HTVN's agreement to sell 5,000,000 shares of restricted HTVN Common
Stock to Xxxxxx.xxx, subject to conditional repurchase, as more
particularly described in Sections 3 and 4 below;
o A Licensed Management Agreement with a 3 year Minimum Fee Guaranty
equal to 10% of the amount of Gross Revenues of the 10 Television
Stations, as more particularly described in Section 5 below; and
o 3 year HTVN Co-Marketing Efforts Obligations, as more particularly
described in Section 6 below.
Upon Closing, the capitalization of Xxxxxx.xxx will be as follows:
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Class Shares % of Total CS
Equivalents
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3,000,000 18.46%
Series A Preferred Stock
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7,800,000 48.0%
Series B Preferred Stock
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5,450,000 13.54%
Common Stock, Options and Future
Employee Common Stock and Option Pool
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*Total CS Equivalents: 16,250,000 100%
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*Post Series A (at a minimum of $1.00 per share) and
Series B Financings
Xxxxxx.xxx anticipates that it will conduct a Series C Preferred Stock
Financing 6 months after the Closing, in which it will seek to raises additional
funds in the amount of approximately $20,000,000.
2. TRANSFER OF INTERESTS IN TELEVISION STATIONS. Upon Closing, HTVN will
sell and transfer to Xxxxxx.xxx less than 50%, but more than 25%, of all of the
equity interests in ten (10) television stations to be agreed upon during due
diligence (the "TELEVISION STATIONS"), provided that such transfer may be made
to Xxxxxx.xxx, or to its nominee without approval by the Federal Communications
Commission, and without licensing of, or transfer of any FCC license to,
Xxxxxx.xxx, as determined by FCC counsel to HTVN and Xxxxxx.xxx, and otherwise
in compliance with all communications and other laws and, provided further, that
following such transfer HTVN shall have management and control of such
Television Stations sufficient to enter in the LMA described in Section 5 below.
The parties will agree on the form of an equity interests transfer agreement,
which will include customary terms and conditions, customary representations and
warranties, as well as customary conditions to closing.
(a) SELECTION OF TELEVISION STATIONS. In determining which
television stations will be transferred to Xxxxxx.xxx, Xxxxxx.xxx will be given
preference in choosing the geographical markets served by such stations, except
for existing stations serving the markets of Dallas, Houston, San Antonio and
Del Rio, Texas.
3. HTVN SHARES. At the Closing, HTVN will agree to sell to Xxxxxx.xxx.
5,000,000 restricted shares of HTVN Common Stock (the "HTVN Shares") upon the
closing of Xxxxxx.xxx's Series C Preferred Stock Financing. The purchase price
for the HTVN Shares will be $1.00 per share. The parties will agree on the form
of a stock purchase agreement, which will include customary terms and
conditions, customary representations and warranties, as well as customary
conditions to closing.
(a) RESTRICTIONS ON TRANSFER OF HTVN SHARES. The HTVN Shares will
not be registered under the Securities Act, will be restricted securities, will
not be subject to transfer during the time they are subject to the HTVN
Repurchase Right (described in paragraph 4 below), and the certificates
evidencing the HTVN Shares or the transfer agent instructions will bear
appropriate legends or contain appropriate stop-transfer instructions, as the
case may be. The HTVN Shares will only be able to be sold or otherwise
transferred if subsequently registered under the Securities Act or if an
exemption from registration is available therefor. HTVN will grant to Xxxxxx.xxx
(a) piggyback registration rights subject to underwriter cutback to 30%; and (b)
one (1) S-3 registration per 12-month period with minimum offering of
$10,000,000; in each case exercisable on or after January 1, 2001, but subject
to a right of first offer at fair market value in favor of HTVN, exercisable for
10 business days following Xxxxxx.xxx's notice of proposed offering. HTVN will
agree to maintain current public information within the meaning of SEC Rule 144.
4. HTVN REPURCHASE RIGHTS. All HTVN Shares sold to Xxxxxx.xxx and all.
other Xxxxxx.xxx assets, including, but not limited to, all equity interests in
Television Stations that have been transferred to Xxxxxx.xxx, will be subject to
all-or-nothing repurchase by HTVN, subject to the assumption by HTVN of up to
$5,000,000 of Xxxxxx.xxx liabilities within ninety (90) days after the date that
is 3 years from the Closing Date, in the event that Xxxxxx.xxx has not yet (a)
had a registration statement with respect to an initial public offering of
shares of its Common Stock (with a per share price of not less than $15.00 and
aggregate gross proceeds to the Company of not less than $50 Million) become
effective, or (b) the closing of an acquisition by merger or sale of assets in
which Xxxxxx.xxx or the shareholders of Xxxxxx.xxx, as the case may be, receive
cash, securities or other consideration in exchange for their shares or for such
assets, as the case may be, provided that the holders of Series A and Series B
Preferred Stock or the Company, as the case may be receive net proceeds of such
sale or exchange which, in the aggregate, exceeds the original cost of such
Preferred Stock then outstanding plus the amount of all declared and unpaid
dividends thereon, if any (each a "QUALIFIED LIQUIDITY EVENT"). In the event
that HTVN exercises its repurchase right, the HTVN Shares will be repurchased
at, a price of $1 .00 per share, and all other Xxxxxx.xxx, assets will be
repurchased at fair market value as determined by independent third parties.
HTVN will be responsible for reimbursing Xxxxxx.xxx for any sales, income or
other taxes incurred by Xxxxxx.xxx in connection with the repurchase. All HTVN
Shares not repurchased by HTVN as provide in this paragraph will be released
from the repurchase right.
5. LICENSED MANAGEMENT AGREEMENT. On. the Closing Date, HTVN and
Xxxxxx.xxx will enter into a 3 year exclusive and non-cancelable Licensed
Management Agreement ("LMA") with respect to all of the Television Station
owning or operating entities in which Xxxxxx.xxx receives equity interests
pursuant to Section 2 above. Pursuant to such LMA which HTVN will provide
management services free of charge. Under the terms of the LMA, HTVN will make
LMA fee payments to Xxxxxx.xxx in accordance with an industry standard fee
schedule for management of similar stations, provided that HTVN will agree to
make minimum guaranteed quarterly fee payments, in the amount equal to 10% of
the amount of Gross Revenues of the 10 Television Stations in which Xxxxxx.xxx
holds equity interests, for such quarter, each due within 30 days of HTVN
quarter-end, for 3 years. Xxxxxx.xxx will have customary audit rights.
6. JOINT MARKETING EFFORTS.
(a) HTVN MARKETING EFFORTS. For three (3) years from the Closing
Date, HTVN will agree to provide Xxxxxx.xxx with the following marketing
efforts:
(i) Exhibition of Xxxxxx.xxx's logo on HTVN's network
sponsorship billboards airing 5 times per week, but not more
than once per day, exclusive of all other continuous ".com,"
".net," ".org," or ".gov" logos of any type;
(ii) Advertising across HTVN's network with an
equivalent cost measured in accordance with generally
applicable pricing by HTVN for equivalent advertising equal to
an aggregate of no less than $100,000,000. Such advertising
shall run and be placed on such days and at such times and
locations as the parties shall mutually agree, and HTVN shall,
upon request by Xxxxxx.xxx, which may be made from time to
time, use reasonable best efforts to acquire for Xxxxxx.xxx
radio and print advertising or cash, in exchange for
Xxxxxx.xxx's advertising rights based on the allocated cost
thereof, from and with third parties reasonably acceptable to
HTVN;
(iii) Programming time of 30 continuous minutes 5 times
per week, but not more than once per day, during the hours of
noon through 2:00 am. across HTVN's network, for use by
Xxxxxx.xxx for sponsored program presentation based on
guidelines for content to be mutually agreed;
(iv) Production of Xxxxxx.xxx sponsored programs at HTVN
production cost, provided that Xxxxxx.xxx shall reimburse HTVN
for all extraordinary costs, including, but not limited to,
any and all costs of outside actors, special services not
otherwise generally provided by HTVN, and non-HTVN writers and
directors as may be requested by Xxxxxx.xxx, with HTVN to have
a right of prior review and approval of content, which may not
be unreasonably withheld, the number of sponsored programs to
be produced by HTVN to be determined by Xxxxxx.xxx in the
exercise of reasonable discretion, subject to general
availability of HTVN facilities;
(v) At no cost to HTVN, use and access to all HTVN
program inventory by license or sublicense of broadcasting
rights, all necessary owner and syndication consents, an
infringement indemnity, and no reciprocal advertising
obligations due from Xxxxxx.xxx; and
(vi) Use of HTVN sales force to sell advertising for
Xxxxxx.xxx, as will be agreed by the parties at or before the
Closing.
(b) XXXXXX.XXX MARKETING EFFORTS. For three (3) years from the
Closing Date, Xxxxxx.xxx will agree to provide HTVN with all of the following
marketing efforts:
(i) Exhibition of HTVN's logo continuously on
Xxxxxx.xxx's home page, exclusive of all other logos of
providers of television programming; and
(ii) Hyperlink buttons for general Hispanic/Latin
program video streaming content to be provided only by HTVN
and not by Univision, Telemundo, TV Azteca and Televisa.
(c) XXXXXX.XXX PAYMENTS. In connection with HTVN's marketing
efforts, Xxxxxx.xxx will pay HTVN the following amounts: (i) $100,000 upon
Closing, provided that Xxxxxx.xxx has raised at least $3,000,000 in its Series A
Preferred Stock Financing, and (ii) $400,000 upon closing of Xxxxxx.xxx's Series
C Preferred Stock Financing.
(d) RENEWAL OF TERM. The term will renew for additional three (3)
year periods unless either party gives the other notice of termination at least
180 days prior to the end of the current term, provided that such xxxxx has
reasonable commercial grounds for termination as will be agreed upon.
7. CONDITIONS. The consummation of the proposed relationship shall
be subject to customary closing conditions as well as the following:
(a) Completion of satisfactory due diligence review by each
party of the other;
(b) Negotiation, execution and delivery of definitive
agreements;
(c) Approval of the definitive agreements by the Boards of
Directors of the parties;
(d) Satisfaction of any applicable federal or state filing or
licensing requirements and the receipt of any applicable federal or state
regulatory approvals which are required in connection with the
transactions; and
(e) The parties shall enter into an agreement not to compete
directly with each other or to solicit each other's employees for a period
of three (3) years from the Closing Date.
(f) Xxxxxx.xxx shall have closed its Series A Financing in an amount
not less than $3 Million.
8. DISCLOSURE AND ANNOUNCEMENTS. Each party agrees that the other may
disclose the existence and terms of this Agreement in connection with its
financings and other corporate transactions, provided that each party agrees to
consult with the other in advance concerning the form timing and contents of all
general public announcements, disclosures and filings, to the extent that such
public announcements, disclosures and filings otherwise concern the parties'
relationship, or concern the other party's operations, condition or prospects.
9. NO-SHOP. Each party agrees that, until termination in accordance with
Section 13 below, (a) such party shall not facilitate, solicit, encourage, or
take any action to facilitate any inquiry with respect to, or making of, any
potential or actual proposal for a strategic relationship of a kind described
herein with any third party, and (b) such party shall not engage in any
negotiation or discussion with, or furnish any information or data to, any third
party relating to any such proposal.
10. ACCESS FOR DUE DILIGENCE. In connection with the establishment of the
relationship described herein each party will afford the other and its
accountants, counsel and other representatives with reasonable access to its
properties, books, records, personnel, business and commercial relationships in
order that such party may have full opportunity to make such investigation as it
reasonably desires.
11. EXPENSES. Each party shall bear its own expenses in connection
with preparing for and consummating the transactions contemplated herein.
12. NO BROKER'S OR FINDER'S FEE. Each party represents and warrants to the
other than no person or entity will have any claim to any broker's or finder's
fee arising out of the transactions contemplated hereunder by any person
claiming to have been engaged by such party. Each party agrees to indemnify the
other for any loss caused by inaccuracy or breach of the foregoing
representation and warranty.
13. TERMINATION. This Agreement may be abandoned or terminated (a) at any
time by the mutual written agreement of the parties hereto, (b) at the option of
either party hereto on written notice to the other if the Closing shall not have
taken place by June 30, or (c) by Xxxxxx.xxx, in the event that Xxxxxx.xxx does
not raise $3 Million or is otherwise unable to close its Series A Financing by
April 15, 2000.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding between the parties with regard to the subjects hereof.
[Signature Page Follows]
WHEREFORE, the parties have executed and delivered this Agreement in
Principal as of the date first written above.
XXXXXX.XXX, INC.,
a California corporation
By /S/ XXXXXX XXXXXXX
-----------------------------------
Name: Xxxxxx Xxxxxxx
Title: Founder, Cubico Inc., 3-20-00
HISPANIC TELEVISION
NETWORK, INC.,
a Delaware corporation
By /S/ XXXXX X. XXXXXXX
----------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
EXHIBIT A
to AGREEMENT IN PRINCIPAL
SUMMARY OF RIGHTS, PREFERENCES AND PRIVILEGES
SERIES B PREFERRED STOCK
Dividends: The holders of the Series B Preferred Stock shall
be entitled to receive noncumulative dividends in
preference to any dividend on the Common Stock,
but pari passu with any dividends on the Company's
Series A Preferred Stock, at a rate of 8.0% per
annum per share, payable when as and if declared
by the Board of Directors.
Liquidation Preference: The holders of Series B Preferred Stock shall be
entitled to liquidation preference relative to the
Common Stock of a per share amount equal to $4.62
(the "ORIGINAL SERIES B PURCHASE PRICE"), plus any
declared but unpaid dividends (the "INITIAL
LIQUIDATION PREFERENCE"). If upon any liquidation,
the assets of the Company are insufficient to pay
the Initial Liquidation Preference and the
applicable liquidation preference of the holders
of the Company's Series A Preferred Stock in full,
then such assets shall be distributed among the
holders of Series B Preferred Stock and the
Company's Series A Preferred Stock ratably in
proportion of the full amounts to which they would
otherwise be entitled.
After the payment of the Initial Liquidation
Preference to the holders of the Series B Preferred
Stock and the applicable liquidation preference to
the holders of the Company's Series A Preferred
Stock, and any other distribution that may be
required with respect to Series B Preferred Stock
that may from time to time come into existence, which
shall be pari passu with all other distributions that
may be required with respect to the Company's Series
A Preferred Stock that may from time to time come
into existence, the remaining assets of the Company
shall be distributed pro rata to the holders of the
Common Stock.
Immediately prior to a liquidating event, a holder of
Series B Preferred Stock may convert any of such
shares of Series B Preferred Stock into shares of
Common Stock. A merger, consolidation, share
exchanges, acquisition, sale of voting control or
sale of substantially all of the assets of the
Company in which the current shareholders of the
Company do not own a majority of the outstanding
shares of the surviving corporation shall be deemed
to be a liquidation.
Conversion: The holders of the Series B Preferred Stock shall
have the right to convert the Series B Preferred
Stock, at any time, into shares of Common Stock. The
initial conversion rate shall be 1:1, subject to
adjustment as provided below.
Automatic Conversion: All shares of Series B Preferred Stock shall be
converted automatically into shares of Common
Stock, at the then applicable conversion rate, (i)
in the event that the holders of at least a
majority of the outstanding Series B Preferred
Stock, voting as a separate class, consent to such
conversion, (ii) upon the closing of a firmly
underwritten public offering of shares of Common
Stock of the Company at a per share price not less
than $15.00 and for aggregate gross proceeds to
the Company of not less than $50 million (before
deduction of underwriters commissions and
expenses) (a "QUALIFIED IPO"), or (iii) upon the
closing of a consolidation or merger of the
Company or a sale of all or substantially all of
its assets in a transaction in which the Company
or the shareholders of the Company, as the case
may be, receive net cash, securities or other
consideration which, in the aggregate, exceeds the
amount determined by adding the product of the
Original Series A Purchase Price multiplied by the
number of shares of Series A Preferred Stock then
outstanding, plus the product of the Original
Series B Purchase Price multiplied by the number
of shares of Series B Preferred Stock then
outstanding, plus the total amount of all declared
and unpaid dividends thereon, if any, as
determined by the Board of Directors.
Anti-dilution Provisions: The conversion rate of the Series B Preferred Stock
will be subject (a) to a broad based, weighted
average adjustment (based on all outstanding
shares of Series A Preferred Stock, Series B
Preferred Stock and Common Stock, as well as
outstanding and reserved options) to reduce dilution
in the event chat the Company issues additional
equity securities (other than the 2,450,000 reserved
employee shares described under "EMPLOYEE POOL"
below, and such additional shares issued under such
Employee Pool as may be approved in the future by the
Board) at a purchase price less than the Series B
Preferred Stock purchase price, and (b) to adjustment
upon the closing of the Company's Series C Preferred
Stock Financing, as is necessary to provide the
holders of Series B Preferred Stock with the right to
convert such Series B Preferred Stock into common
stock representing in the aggregate 48% of the
Company's common stock and common stock equivalents,
calculated on a fully-diluted and as-converted basis,
and after giving effect to the Series C Preferred
Stock Financing and to the initial Employee Pool, in
the event that the purchase price of the Company's
Series C Preferred Stock is greater than the Series B
Preferred Stock purchase price. The conversion rate
will also be subject to proportional adjustment for
stock splits, stock dividends, combinations of
shares, recapitalizations and the like.
Redemption: The Series B Preferred Stock shall be non-redeemable.
Board of Directors: The size of the Company's Board of Directors shall be
set at 5. Holders of the outstanding shares of the
Company's capital stock to be entitled to elect
Directors to the Board of Directors as follows:
Common Stock - Holders of a majority of the
outstanding shares of Common Stock, voting separately
as a class, shall be entitled to elect one (1)
Director.
Series A Preferred - Holders of a majority of the
outstanding shares of Series A Preferred Stock,
voting separately as a class, shall be entitled to
elect one (1) Director.
Common Stock and Series A Preferred - One (1)
Director shall be such person as the holders of a
majority of the outstanding shares of Common Stock,
voting separately as a class. and the holders of a
majority of the outstanding shares of Series A
Preferred Stock, voting separately as a class, shall
agree.
Series B Preferred - Holders of a majority of the
outstanding shares of Series B Preferred Stock,
voting separately as a class, shall be entitled to
elect Two (2) Directors.
Voting Rights: The holders of the Series B Preferred Stock will
vote together with the holders of Series A Preferred
Stock and Common Stock and not as a separate class
except as specifically provided herein or as
otherwise required by law. Each share of the Series B
Preferred Stock shall have a number of votes equal to
the number of shares of Common Stock then issuable
upon conversion of such shares of Preferred Stock.
Protective Provisions: For so long as any shares of Series B Preferred
Stock remain outstanding, consent of the holders
of at least a majority of the Series B Preferred
Stock shall be required for any action that (i)
increases or decreases the authorized number of
shares of Common Stock, Series A Preferred Stock
or Series B Preferred Stock, (ii) creates (by
reclassification or otherwise) any new class or
series of shares having any rights, preferences or
privileges senior to or on a parity with Series A
Preferred Stock and Series B Preferred Stock,
(iii) results in the redemption of any shares of
Common Stock (other than pursuant to equity
incentive agreements with service providers giving
the Company the right to repurchase shares upon
the termination of services), Series A Preferred
Stock or Series B Preferred Stock, (iv) results in
any merger, consolidation, share exchange, other
corporate reorganization, sale of control, or any
transaction in which all or substantially all of
the assets of the Company are sold, (v) amends or
waives any provision of the Company's Articles. of
Incorporation or Bylaws so as to adversely alter
or change the rights of the Series B Preferred
Stock, including, but not limited to the right to
elect a number of Directors, or (vi) results in
the payment or declaration of any dividend on any
shares of Common Stock, Series A Preferred Stock
or Series B Preferred Stock.
Information Rights: So long HTVN continues to hold at least
250,000 shares of Series B Preferred Stock or Common
Stock issued upon conversion of the Series B
Preferred Stock, the Company shall deliver to HTVN
audited annual and unaudited quarterly financial
statements. This provision shall terminate upon a
Qualified IPO.
Registration Rights: Registrable Securities shall include Common
Stock issuable or issued upon conversion of the
Series B Preferred Stock, and any securities issued
or issuable upon or in exchange therefor or
replacement thereof.
DEMAND RIGHTS: If HTVN requests that the Company file
a Registration Statement having an aggregate offering
price to the public of not less than $10,000,000 nor
comprising less than 20% of the Registrable
Securities, the Company will use its best efforts to
cause such shares to be registered for resale to the
public; provided, however, that the Company shall not
be obligated to effect any such registration before
the earlier of December 31, 2004 or six months after
the occurrence of a Qualified IPO. The Company shall
have the right to delay such registration under
certain circumstances for periods not in excess of
ninety (90) days in the aggregate in any twelve (12)
month period. In connection with any such
registration, the Company will enter into customary
agreements with the underwriters selected by the
Investors.
The Company shall not be obligated to effect more
than one (1) registration under these demand right
provisions, and shall not be obligated to effect a
registration during the forty-five (45) day period
prior to the Company's good faith estimate of the
date of filing of, and ending on a date one hundred
eighty (180) days after the effective date of the
registration affecting the Company's initial public
offering. Any demand registration shall include only
the Registrable Securities held by HTVN.
COMPANY REGISTRATION: HTVN shall be entitled to
"piggy-back" registration rights on all registrations
of the Company or on any demand registrations of any
other investor subject to the right, however, of the
Company and its underwriters (in the case of
Company-initiated registrations) to reduce the number
of shares proposed to be registered pro rata among
the piggy-back holders in view of market conditions.
S-3 RIGHTS: In addition to the other registration
rights described herein, HTVN shall be entitled to
one (1) demand registration on Form S-3 (if available
to the Company) per twelve-month period so long as
such registered offerings are not less than
$2,000,000.
EXPENSES: With the exception of Company
registrations which will be borne by the Company,
the registration expenses of any registration
hereunder will be borne by the selling
Shareholders.
TRANSFER OF RIGHTS: The registration rights may
not be transferred, except to affiliates of the
holders of such registration rights.
LOCK-UP PROVISION: If requested by the Company and
its underwriters, HTVN will not sell its shares for a
specified period (but not to exceed 180 days)
following the effective date of the Company's initial
public offering.
OTHER PROVISIONS: Other provisions shall be contained
in the Shareholders Agreement with respect to
registration rights as are reasonable, including
cross-indemnification, the period of time in which
the Registration Statement shall be kept effective,
and underwriting arrangements.
Right of First Refusal
and First Offer: In the event the Company proposes to offer equity
securities to any person (other than securities
issues pursuant to permitted employee benefit
plans or pursuant to acquisitions), HTVN shall
have the right of first offer to purchase its pro
rata portion of such shares to maintain its
percentage ownership in the Company. Such right of
first refusal will terminate upon a Qualified IPO.
Co-Sale Rights: HTVN shall have co-sale rights with respect
to sales or transfers of Common Stock by Xxxxxx
Xxxxxxx and Xxxx Xxxxxxx (the "FOUNDERS"), other than
transfers to family trusts for estate planning
purposes and other typical exceptions.
Purchase Agreement: The investment shall be made pursuant to a Stock
Purchase Agreement reasonably acceptable to the
Company and HTVN, which agreement shall contain,
among other things, appropriate representations and
warranties of the Company, covenants of the Company
reflecting the provisions set forth herein and
appropriate conditions of closing, including an
opinion of counsel for the Company. The Stock
Purchase Agreement shall provide that it may only be
amended and any waivers thereunder shall only be made
with the approval of HTVN. Registration rights
provisions may be amended or waived solely with the
consent of HTVN.
Founders Vesting: Xxxxxx Xxxxxxx and Xxxx Xxxxxxx will both be
subject to a Company right of repurchase on two-
thirds (2/3)of their respective shares over a 2 year
period subject to linear monthly vesting. All of
their shares which are subject to the repurchase
option will receive accelerated release from the
repurchase option in the event of any involuntary
cessation of employment (including constructive
termination) other than "for cause" within twelve
months after an acquisition of the Company.
Employee Option Pool: Upon the Closing of this financing there will be
2,450,000 shares of Common Stock reserved for
issuance to key employees, and directors and
consultants.
Stock Vesting: Options granted to purchase such reserved
shares shall be subject to vesting over a three year
period with 1/3 of the shares vesting on the first
anniversary of the date of grant and the remainder
vesting as to 1/24 per month thereafter.
Restrictions on Sales: The Company shall have a right of first refusal on
all employee transfers of Common Stock, subject to
normal exceptions.
Proprietary Information
and Inventions Agreement: Each officer, employee and consultant of the
Company shall enter into an acceptable proprietary
information and inventions agreement.
Finders: The Company and HTVN shall each indemnify the
other for any broker's or finder's fees for which
either is responsible.
