AGREEMENT
This Agreement is entered into as of the first day of June 2000 by and between Hispanic Television Network, Inc. ("HTVN"), a Delaware corporation, and Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") and Xxxxxx X. Xxxx ("Xxxx"), the sole shareholders of Televideo, Inc. ("TVI"), a Texas corporation, and MGB Entertainment, Inc. ("MGB"), a Texas corporation, and Xxxxxx Xxxxxxxx ("Xxxxxxxx").
RECITALS AND REPRESENTATIONS
Xxxxxxxx and Xxxx desire to sell to HTVN and HTVN desires to purchase from Xxxxxxxx and Xxxx all of the issued and outstanding shares of the common stock of TVI and MGB.
MGB owns and/or leases and/or leases with option to buy the assets described on Exhibit "A" attached hereto and incorporated herein for all purposes, and Xxxxxxxx and Xxxx intend to convey to HTVN and HTVN intends to acquire all of such assets through the acquisition of MGB.
TVI owns the assets and contract rights described on Exhibit "B" attached hereto and incorporated herein for all purposes, and Xxxxxxxx and Xxxx intend to convey to HTVN and HTVN intends to acquire all of such assets and contract rights through the acquisition of TVI.
Xxxxxxxx and Xxxx represent that they collectively own all of the issued and outstanding shares of the common stock of TVI and MGB, that such shares are free and clear of all liens and claims of ownership from third parties, and that Xxxxxxxx and Xxxx have full authority to enter into this Agreement and to sell such shares to HTVN without the consent of any third party.
HTVN represents that HTVN has full corporate authority to enter into this Agreement, that the purchase of the shares of TVI and MGB by HTVN under the following terms and conditions has been authorized by the Board of Directors of HTVN.
The Recitals and Representations are an integral part of this Agreement.
NOW THEREFORE, HTVN, Xxxxxxxx and Xxxx agree as follows:
1. Consideration.
(a.) HTVN will cause to be issued and delivered to Xxxxxxxx 50,000 shares of the common stock of HTVN. HTVN will cause to be issued and delivered to Xxxx 50,000 shares of the common stock of HTVN. All but 30,000 of such shares of common stock of HTVN will be restricted and may not be sold for a period of one year from the date of issue and such restriction shall be noted on the share certificates. The balance of 30,000 shares shall be sold to retire the trade debt and lease obligations and trade payables of MGB in the following manner: 15,000 of the shares shall be issued in the name of Xxxxxxxx and 15,000 issued in the name of Xxxx. The shares shall be sold in increments of 3,500 shares per week, unless a higher number is agreed to by Xxxxxxxx Xxxx, CFO of HTVN. The net proceeds of the shares, after a reserve for income taxes, shall be used first to pay liabilities owed by MGB to third parties and at such time as all such third party liabilities have been paid in full then to notes owed by MGB to Xxxxxxxx and/or Xxxx. |
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(b.) In addition, HTVN shall issue to Xxxxxxxx a stock option for the purchase of 55,000 shares of the common stock at $13.75 each, exercisable one-half on the first anniversary of such option and one-half on the second anniversary of such option. Once the option becomes exercisable, it shall remain exercisable for a period of 180 days. |
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(c.) In addition, HTVN shall issue to Xxxx a stock option for the purchase of 55,000 shares of the common stock at $13.75 each, exercisable one-half on the first anniversary of such option and one-half on the second anniversary of such option. Once the option becomes exercisable, it shall remain exercisable for a period of 180 days. |
2. Employment Agreements.
(a.) TVI shall enter into employment agreements with the following key employees at the salaries indicated for a period of two years:
Employee |
Title |
Annual Salary |
Xxxxxxx X. Xxxxxxxx |
President |
$80,000 |
Xxxxxx X. Xxxx |
Senior Vice President |
$80,000 |
Xxxxxx Xxxxxxxx |
Vice President |
$45,000 |
Fletcher, Getz, and Xxxxxx Xxxxxxxx agree to use their respective best efforts to promote the business and profitability of TVI during the respective terms of their employment agreements.
(b.) The employment agreements will contain terms normally included in employment agreements with other employees entered into by HTVN, including a non-compete provision for a one year period covering any market in which HTVN owns a television station or network affiliate. HTVN will guarantee the terms of the employment agreements in the event that TVI ceases to exist for any reason during the two year term of the employment agreements.
(c.) In addition, HTVN shall issue to Xxxxxx Xxxxxxxx a stock option for the purchase of 7,000 shares of the common stock of HTVN at $13.75 per share, exercisable as to 2,334 shares on the first anniversary of such option, as to 2,333 shares on the second anniversary of such option, and as to 2,333 shares on the third anniversary of such option. Once the option becomes exercisable, it shall remain exercisable for a period of 180 days each year.
(d.) As a further incentive to Xxxxxx Xxxxxxxx, for each year in which the net profits of TVI increase by at least ten percent, based on year end financial statements prepared by the certified public accountants for TVI using generally accepted accounting procedures, over the prior year's net profits, HTVN shall issue to Xxxxxx Xxxxxxxx an additional stock option for the purchase of 10,000 shares of the common stock of HTVN at $13.75 per share, exercisable for a period of 180 days. The base year for purposes of this provision shall be 2000. If the profit increase is met each year, the options would be granted to Xxxxxx Xxxxxxxx in 2001, 2002, and 2003.
3. Trademarks and Copyrights. Xxxxxxxx and Xxxx agree to transfer and/or cause to be transferred to HTVN any and all trademarks and copyrights, including, without limitation, those related to feature films, film products, television programs and/or music videos, that are held in the name of Fletcher, Getz, TVI, and MGB.
4. Confidentiality Agreement. HTVN, Xxxxxxxx and Xxxx agree that it is in the best interests of TVI and MGB as well as of HTVN, Xxxxxxxx and Xxxx, that the terms of this Agreement and of any and all other agreements, contracts, bills of sale, assignments and similar documents that may be executed pursuant to this Agreement, remain confidential and agree to execute a separate Confidentiality Agreement. Xxxxxxxx and Xxxx agree that if they or either of them or if Xxxxxx Xxxxxxxx knowingly violates the terms of the Confidentiality Agreement, such violation could directly impact on the profitability of TVI, and in the event that a breach of the Confidentiality Agreement clearly is a result of an action by Fletcher, Getz, or Xxxxxx Xxxxxxxx, Xxxxxxxx and Xxxx agree to sell and convey 35,000 shares of the common stock of HTVN to HTVN for no consideration as liquidated damages for such breach.
5. Corporate Structure. The management and structure of TVI and MGB shall remain the same after the closing of the transactions contemplated by this Agreement, except that MGB shall be converted to a subchapter C corporation. HTVN agrees to cause TVI and/or MGB to honor the terms of all existing equipment leases and loan arrangements until such leases and loan obligations have been paid in full.
6. Execution. HTVN, Xxxxxxxx and Xxxx agree to execute all documents relative to the transaction within 30 days of the execution of this agreement.
7. Choice of Law. HTVN, Xxxxxxxx and Xxxx agree that the laws of the state of Texas shall apply excepting those that are preempted by Federal statute or Delaware General Corporation Law.
Executed as of the first date above written.
/s/ Xxxxx Xxxxxxx |
/s/ Xxxx Xxxxxxxx |
/s/ Xxxxxx X. Xxxx |
/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx