-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EhjdN1c2Xe8yX42QSJtWuH5hluDKsucgSLvCA1dKuk++hvnusuLySDMFBQjFlbCU wna7MzD1gN05GApeKdXsNw== 0000897101-99-000763.txt : 19990805 0000897101-99-000763.hdr.sgml : 19990805 ACCESSION NUMBER: 0000897101-99-000763 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990730 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHILDRENS BROADCASTING CORP CENTRAL INDEX KEY: 0000882160 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 411663712 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-21534 FILM NUMBER: 99677890 BUSINESS ADDRESS: STREET 1: 5501 EXCELSIOR BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55416 BUSINESS PHONE: 6129258840 MAIL ADDRESS: STREET 1: 5501 EXCELSIOR BLVD CITY: MINNEAPOLIS STATE: MN ZIP: 55416 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: July 30, 1999 CHILDREN'S BROADCASTING CORPORATION (Exact name of registrant as specified in its charter) MINNESOTA 0-21534 41-1663712 --------- ------- ---------- (State or other (Commission File No.) (IRS Employer ID No.) jurisdiction of incorporation) 5501 EXCELSIOR BOULEVARD, MINNEAPOLIS, MINNESOTA 55416 ------------------------------------------------------ (Address of principal executive offices) (612) 925-8840 -------------- (Registrant's telephone number, including area code) ITEM 5. OTHER EVENTS. (a) Reference is made to the Press Release issued to the public by the Registrant on August 4, 1999, and attached hereto as an exhibit, relating to the purchase of 51% of Curious Pictures Corporation from the four principals of Curious Pictures Corporation. (b) Reference is made to the cautionary statements of the Registrant, presented in the Registrant's Form 10-KSB, for the year ended December 31, 1998. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits 99.1 Press Release dated August 4, 1999. 99.2 Purchase Agreement dated as of July 27, 1999 and effective as of August 1, 1999, by and among Children's Broadcasting Corporation, a Minnesota corporation; Harmony Holdings, Inc., a Delaware corporation; Curious Pictures Corporation, a New York corporation; and Susan Holden; Stephen Oakes; Richard Winkler; and David Starr, as individuals. 99.3 Curious Stock Agreement dated as of July 27, 1999 and effective as of August 1, 1999, by and among Children's Broadcasting Corporation, a Minnesota corporation; Harmony Holdings, Inc., a Delaware corporation; and Susan Holden; Stephen Oakes; Richard Winkler; and David Starr, as individuals. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: August 4, 1999 CHILDREN'S BROADCASTING CORPORATION BY: /s/ James G. Gilbertson ----------------------- James G. Gilbertson ITS: Chief Operating Officer and Chief Financial Officer 3 EXHIBIT INDEX 99.1 Press Release dated August 4, 1999. 99.2 Purchase Agreement dated as of July 27, 1999 and effective as of August 1, 1999, by and among Children's Broadcasting Corporation, a Minnesota corporation; Harmony Holdings, Inc., a Delaware corporation; Curious Pictures Corporation, a New York corporation; and Susan Holden; Stephen Oakes; Richard Winkler; and David Starr, as individuals. 99.3 Curious Stock Agreement dated as of July 27, 1999 and effective as of August 1, 1999, by and among Children's Broadcasting Corporation, a Minnesota corporation; Harmony Holdings, Inc., a Delaware corporation; and Susan Holden; Stephen Oakes; Richard Winkler; and David Starr, as individuals. EX-99.1 2 PRESS RELEASE EXHIBIT 99.1 CHILDREN'S BROADCASTING CORPORATION, DBA INTELEFILM(SM), PURCHASES 51% OF BI-COASTAL COMMERCIAL PRODUCTION COMPANY, CURIOUS PICTURES PRINCIPALS EXTEND EMPLOYMENT AGREEMENTS THROUGH 2004 MINNEAPOLIS -- AUGUST 4, 1999 -- Children's Broadcasting Corporation DBA iNTELEFILM(SM) (Nasdaq: FILM) announced today that on July 27, 1999 it purchased 51 percent of Curious Pictures Corporation, a commercial production company from a four person management team for $1.5 million in cash and $1.5 million pursuant to a promissory note bearing 8 percent interest due May 31, 2000. Curious Pictures was a subsidiary of Harmony Holdings Inc., of which iNTELEFILM is the largest shareholder. The transaction results in Curious Pictures ownership divided as 51 percent iNTELEFILM and 49 percent Harmony Holdings. In a related transaction, the principals of Curious Pictures extended their employment contracts with Harmony Holdings through December 31, 2004 and received certain rights to shares of iNTELEFILM. In addition, Curious Pictures principals received the right to acquire a minority interest in Curious Pictures and have certain related agreements with iNTELEFILM entitling them to put their Curious Pictures stock to iNTELEFILM upon certain events. "Curious Pictures has built a strong brand in the commercial production industry and we look forward to assisting their exceptional management team in implementing their exciting growth strategies," said iNTELEFILM Chief Executive Officer Christopher T. Dahl. Curious Pictures, a broadcast commercial production company and producer of broadcast television programming, has studios in New York and San Francisco. The company has received numerous industry awards and is currently producing 18 episodes of "A Little Curious," a half-hour daily television show for the HBO Family Channel now in its second season. Certain statements made in this press release constitute "forward looking statements" within the meaning of the Private Securities litigation Reform Act of 1985. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors include, but are not limited to, changes in economic conditions and the risks and uncertainties described in the company's filings with the Securities and Exchange Commission. # # # EX-99.2 3 PURCHASE AGREEMENT EXHIBIT 99.2 PURCHASE AGREEMENT THIS AGREEMENT, dated as of July 27, 1999, 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"); CURIOUS PICTURES CORPORATION, a New York corporation (referred to herein as "Curious"); and SUSAN HOLDEN; STEPHEN OAKES; RICHARD WINKLER; AND DAVID STARR , as individuals (collectively referred to herein as "CP Management"). W I T N E S S E T H: THAT, WHEREAS, Curious has currently issued and outstanding 100 shares of its Common Stock, which shares represent all of the issued and outstanding Common Stock of Curious; WHEREAS, pursuant to an Option and Share Transfer Agreement dated as of December 15, 1996 among CP Management, Curious and HHI ("Option Agreement"), a copy of which is attached hereto as Exhibit A, HHI is the holder of 99 shares (or 99%) of Curious and CP Management is the holder of 1 share or 1% of Curious (the 1 share owned by CP Management shall be referred to herein as the "Curious Share"); WHEREAS, under the Option Agreement, CP Management has the right, based upon Curious reaching certain net income levels, to receive shares of Curious up to an amount not to exceed 50% of the Common Stock of Curious; WHEREAS, contemporaneously herewith and incorporated herein, CP Management, Curious and HHI have entered into an agreement whereby the parties agree that Curious has reached such net income levels; that CP Management currently has the right to receive 50 shares (or 50%) of the issued and outstanding common stock of Curious; and that such shares are to be transferred from HHI to CP Management (the "Curious Agreement"); WHEREAS, contemporaneously herewith and incorporated herein, each member of CP Management has entered into five (5) year employment agreeements with Curious; and WHEREAS, CP Management desires to sell, transfer and assign the Curious Share and the Option Agreement to CBC, and CBC desires to purchase such Curious Share and the Option Agreement, and HHI consents to such sale, transfer and assignment 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. OWNERSHIP, TRANSFER, SALE AND ASSIGNMENT OF CURIOUS SHARE AND OPTION AGREEMENT. (a) CP Management represents that collectively they are the owner of the Curious Share and none of them owns any other shares of Curious Common Stock other than the right(s) to receive shares under the Option Agreement. CP Management and HHI represent that under the Option Agreement, CP Management has earned the right to receive 50 shares or 50% of the issued and outstanding Common Stock of Curious from HHI, and that CP Management has the right to sell, transfer and assign their interest in the Option Agreement and the Curious Share to CBC. (b) Subject to the terms and conditions hereinafter in this Agreement, CP Management agrees to sell, transfer and deliver the Curious Share and their entire interest in the Option Agreement to CBC on the Closing Date (as that term is hereinafter defined), free and clear of all security interests, liens and encumbrances, except for any subordination obligations to Fremont Financial Services, Inc. 2. PURCHASE AND CONSIDERATION. (a) On the basis of the representations and warranties, and subject to the terms and conditions set forth in this Agreement, CBC hereby agrees to purchase and CP Management agrees to sell, the Curious Share and CP Management's interest in the Option Agreement on the Closing Date. The total purchase price for the purchase of the Curious Share and assignment of the Option Agreement (the "Purchase Price"), will be the sum of Three Million and no/100 Dollars ($3,000,000.00) consisting of Two Million Seven Hundred Thousand and no/100 Dollars ($2,700,000.00) for the Option Agreement and Three Hundred Thousand and no/100 Dollars ($300,000.00) for the Curious Share and payable as follows: 1. The sum of $1,500,000 in cash at Closing (as defined below) to CPManagement ($375,00 to each member); and 2. The execution of a promissory note at Closing in the amount equal to $1,500,000 ($375,000 to each member) payable on May 31, 2000 at an interest rate equal to eight percent (8%) per annum. The interest payments shall be paid to CP Management in quarterly payments. In the event any member(s) of CP Management's employment with Curious is terminated pursuant to 5(b) of his/her employment agreement or any member(s) of CP Management terminates his/her employment agreement prior to the payment of the promissory note, the principal amount of this promissory note shall be reduced by the sum of $375,000 for such member(s). Any cancellation or reduction of the promissory note pursuant to this section shall be in addition to any other remedies CBC may have against the members of CP Management and shall not be deemed to be liquidated damages. (b) HHI and Curious consent to the sale and purchase of the Curious Share and Option Agreement as provided in Section 2(a), and the assignment of all of CP Management's rights therein. (c) As additional consideration and as an inducement for each member of CP Management to enter into employment agreements with Curious, CBC agrees to grant each member of CP Management a warrant for the purchase of 75,000 shares of CBC's common stock at a price equal to the ten (10) day average closing price for the ten (10) trading days preceding the date of Closing. The warrant shall be in the form attached hereto as Exhibit B incorporated herein by reference as if set forth in full. 3. CLOSING. The closing of the transactions contemplated by this Agreement (the "Closing") unless otherwise agreed to by the parties, shall take place at the offices of Curious, 440 Lafayette Street, New York, New York 10003 at 9:00 a.m. on July 30, 1999 (such date of Closing is hereinafter sometimes referred to as the Closing Date). The Closing shall be subject to the satisfaction of all of the conditions to CBC's obligations set forth in Section 8 of this Agreement. At the Closing: (i) CP Management shall deliver, assign and transfer (or request that HHI deliver, assign and transfer) to CBC certificate(s) representing the Curious Share, appropriately endorsed or accompanied by a separate instrument or instruments of assignment in writing, in proper form for registration of transfer; (ii) CP Management shall deliver, assign and transfer the Option Agreement to CBC; (iii) CBC shall deliver to each member of CP Management a warrant agreement for the purchase of 75,000 shares, a form of which is attached hereto as Exhibit B; (iv) CP Management shall deliver the resignations referred to in Section 8.4 of this Agreement; (v) Each member of CP Management shall execute and deliver the employment agreements in the forms attached hereto as Exhibits C to F incorporated herein by reference as if set forth in full; (vi) $1,500,000 in cash shall be sent by CBC by wire transfer to such account or accounts in one or more banks in the United States of America as CP Management shall specify in writing delivered to CBC not less than forty eight (48) hours prior to the Closing Date, otherwise such purchase price shall be payable by check or checks; (vii) CBC shall execute a promissory note in the form of Exhibit G attached hereto and incorporated herein by reference as if set forth in full in the amount of $1,500,000 payable to CP Management at eight percent (8%) interest secured by the Curious Share and the Option Agreement, subject to subordination obligations with Fremont Financial Services, Inc.; (viii) CP Management, HHI and Curious shall deliver an executed Curious Agreement stating and confirming that CP Management has the right to receive 50% which equals 50 shares of the issued and outstanding common stock of Curious from HHI and consenting to assignment and transfer of the Option Agreement and the Curious Share to CBC, a form of which is attached hereto as Exhibit H; and (ix) Certified Resolutions of Curious, HHI and CBC approving the terms of this transaction. 4. REPRESENTATIONS AND WARRANTIES BY HHI. HHI represents and warrants as follows, which representations and warranties shall be deemed to have been made again at Closing; that HHI is a corporation organized and existing in good standing under the laws of the State of Delaware with full power and authority to enter into this Agreement to which it is a party and enter into and complete the transactions contemplated herein and therein; all required corporate action has been duly and validly taken by HHI to make and carry out this Agreement and the transactions contemplated herein; this Agreement constitutes the valid and binding obligation of HHI enforceable in accordance with its terms; the execution of the Agreement and, the completion of the transactions herein involved will not result in the violation of any order, license, permit, rule, judgment or decree to which HHI is subject or the breach of any contract, agreement or other commitment to which HHI is a party or by which it or its properties is bound or conflict with or violate any provision of HHI's Articles of Incorporation, By-Laws, or other organizational documents; and no other consent of any kind is required that has not been obtained to make or carry out the terms of this Agreement. 5. REPRESENTATIONS AND WARRANTIES BY CURIOUS. Curious represents and warrants as follows, which representations and warranties shall be deemed to have been made again at Closing, that Curious is a corporation organized and existing in good standing under the laws of the State of New York with full power and authority to enter into this Agreement to which it is a party and enter into and complete the transactions contemplated herein and therein; all required corporate action has been duly and validly taken by Curious to make and carry out this Agreement and the transactions contemplated herein; this Agreement constitutes the valid and binding obligation of Curious enforceable in accordance with its terms; the execution of the Agreement and, the completion of the transactions herein involved will not result in the violation of any order, license, permit, rule, judgment or decree to which Curious is subject or the breach of any contract, agreement or other commitment to which Curious is a party or by which it or its properties is bound or conflict with or violate any provision of Curious' Articles of Incorporation, By-Laws, or other organizational documents; and no other consent of any kind is required that has not been obtained to make or carry out the terms of this Agreement; that there are only 100 issued and outstanding shares of Curious and that Curious will not issue any additional shares of its Common Stock without receiving the prior written consent of HHI and CBC; and that the financial statements prepared by Curious are substantially correct in all material respects and there has not been any material adverse change in the financial condition of Curious since the latest financial statements. 6. REPRESENTATION AND WARRANTIES BY CBC. CBC represents and warrants as follows, which representations and warranties shall be deemed to have been made again at Closing, that CBC is a corporation organized and existing in good standing under the laws of the State of Minnesota with full power and authority to enter into this Agreement to which it is a party and enter into and complete the transactions contemplated herein and therein; all required corporate action has been duly and validly taken by CBC to make and carry out this Agreement and the transactions contemplated herein; this Agreement constitutes the valid and binding obligation of CBC enforceable in accordance with its terms; the execution of the Agreement and, the completion of the transactions herein involved will not result in the violation of any order, license, permit, rule, judgment or decree to which CBC is subject or the breach of any contract, agreement or other commitment to which CBC is a party or by which it or its properties is bound or conflict with or violate any provision of CBC's Articles of Incorporation, By-Laws, or other organizational documents; that the Curious Share and Option Agreement are being purchased for CBC's own account and not with a view to, or for resale; and that the warrants issued to members of CP Management are duly authorized and upon the exercise of the warrants will be validly issued non-assessable shares of CBC. 7. REPRESENTATION AND WARRANTIES BY CP MANAGEMENT. Each member of CP Management represents and warrants, which representations and warranties shall be deemed to have been made again at Closing that each member has the full right, power, authority and capacity, and is free, without restriction, to enter into and perform this Agreement; each member of CP Management represents and warrants that the Curious Share is owned by CP Management that upon the transfer of the Curious Share to CBC on the Closing Date, CBC will obtain absolute title to the Curious Share, free and clear of all liens, pledges, security interests, claims, charges, options, encumbrances or other adverse claims of any kind whatsoever other than any security interest which has been granted to Fremont Financial; that CP Management makes the same warranties and representations with respect to the Option Agreement, except that the Option Agreement may be subject to subordination obligations with Fremont Financial Services, Inc.; that each member is an accredited investor within the meaning of Regulation D, Rule 501(a) under the Securities Act 1933, as amended. 8. CONDITION OF CBC'S OBLIGATIONS. The obligations of CBC to consummate the transactions contemplated by this Agreement is subject to the fulfillment prior to or on the Closing Date of the following conditions, any of which may be waived in whole or in part in writing by CBC: 8.1 The representations and warranties of CP Management, Curious and HHI shall be true in all material respects as of the Closing Date with the same effect as though made on and as of the Closing Date. 8.2 CP Management and HHI shall have performed and complied with all agreements, covenants or conditions required by this Agreement to be performed and complied with by them prior to or as of the Closing Date. 8.3 ACTION BY HHI AND CURIOUS BOARD OF DIRECTORS. (a) HHI's Board of Directors, prior to the Closing Date, shall have met and duly adopted resolutions, subject to the consummation of the transactions contemplated by this Agreement: (i) to approve the terms of this transaction; (ii) to amend the Option Agreement to allow CP Management to freely assign and transfer CP Management's interest; and (iii) to approve the terms of the employment agreements. (b) Curious' Board of Directors, prior to the Closing Date, shall have met and duly adopted resolutions, subject to the consummation of the transactions contemplated by this Agreement: (i) to approve the terms of this transaction; and (ii) to approve the terms of the employment agreements. 8.4. RESIGNATIONS OF CP MANAGEMENT FROM CURIOUS BOARD. The members of Curious' Board of Directors and all of Curious' subsidiaries (other than Mr. Dahl and Mr. Cameron) shall have tendered their resignations as directors contemporaneously upon the Closing. 9. LEGAL FEES. Provided this transaction is consummated, Curious agrees to pay for any reasonable legal fees and expenses incurred by CP Management from the law firm of Wollmuth, Maher & Deutsch, LLP in connection with this transaction through April 28, 1999, provided that it receives copies of all such legal bills along with any other reasonably requested backup documentation. Beginning April 29, 1999, Curious agrees to pay for any reasonable legal fees and expenses incurred by CP Management in connection with assignment of the Option Agreement and purchase of the Curious Share by CBC. Notwithstanding the foregoing, CP Management shall pay for any legal fees and expenses incurred in connection with their employment agreements and any and all future issuances of shares, exercise of put rights and similar matters that are to the benefit of CP Management. Other than as provided for herein, each party shall be responsible for its or his/her own legal fees and expenses. 10. INDEMNIFICATION. 10.1 MUTUAL 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) (hereinafter sometimes collectively referred to as Losses) in connection with each of the following: (a) Any misrepresentation or breach of any representation or warranty made by such party in this Agreement; and (b) any breach of any covenant, agreement or obligation of such party contained in this Agreement, provided, however, that such party shall not have any obligation under this Section unless the aggregate Losses amount to more than $25,000 (if the Losses exceed $25,000, the indemnification obligations set forth in this Section shall include all such Losses and not only those in excess of $25,000). 10.2 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for indemnification under this section, the indemnified party (hereinafter sometimes referred to as the Indemnified Party) shall promptly notify the party against whom indemnification is sought (hereinafter sometimes referred to as the Indemnifying Party) of the claim and, when known, the facts constituting the basis for such claim. In the event of any such claim for indemnification under this Agreement resulting from or in connection with any claim or legal proceedings by a third party, the notice shall specify, if known, the amount or an estimate of the amount of liability arising therefrom. The Indemnified Party shall not settle or compromise any claim by a third party in respect of which it is entitled to indemnification under this Agreement without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed; provided, however, that if action or suit shall have been instituted against the Indemnified Party and the Indemnifying Party shall not have taken control of such action or suit as provided in this Section after notification thereof, the Indemnified Party shall have the right to settle or compromise such claim after giving notice to the Indemnifying Party as provided in this Section. 10.3 DEFENSE BY INDEMNIFYING PARTY. In connection with any claim that may give rise to a right of indemnification under this Section resulting from or arising out of any claim or legal proceeding by a person other than the Indemnified Party, the Indemnifying Party, at its or his/her sole cost and expense, may, upon written notice to the Indemnified Party, assume the defense of any such claim or legal proceeding if the Indemnifying Party acknowledges to the Indemnified Party in writing the obligation to indemnify the Indemnified Party with respect to all elements of such claim or legal proceeding. If the Indemnifying Party shall assume the defense of any such claim or legal proceeding, the Indemnifying Party shall select counsel reasonably acceptable to the Indemnified Party to conduct the defense of such claim or legal proceeding at the sole cost and expense of the Indemnifying Party, who shall take all steps necessary in the defense or settlement thereof. An Indemnified Party shall be entitled to participate in (but not control) the defense of any such claim or legal proceeding with its own counsel and at its own expense. If the Indemnifying Party shall not assume the defense of such claim or legal proceeding within 15 days after notice thereof shall have been given to in accordance with this Section: (a) the Indemnified Party may defend such claim or legal proceeding in such manner as it may deem appropriate, including, but not limited to, the settlement of such claim or legal proceeding, after giving notice of the same to Indemnifying Party, on terms as the Indemnified Party may deem appropriate and (b) Indemnifying Party shall be entitled to participate in (but not control) the defense of such claim or legal proceeding with their own counsel at their own expense. 11. MISCELLANEOUS PROVISIONS. 11.1 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 Closing. 11.2 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 the party against which enforcement of the change, amendment, waiver, discharge or termination is sought. 11.3 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: Mr. Christopher T. Dahl Children's Broadcasting Corporation 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 926-7946 with copy to: Jill Theis, Esq. Children's Broadcasting Corporation 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 925-8845 If to HHI: Mr. Christopher T. Dahl Harmony Holdings, Inc, 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 926-7946 with copy to: Jill Theis, Esq. Harmony Holdings, Inc. 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 925-8845 If to Curious: Mr. Christopher T. Dahl Curious Pictures Corporation 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 926-7946 with copy to: Jill Theis, Esq. Curious Pictures Corporation 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 925-8845 If to CP Management: Susan Holden, Stephen Oakes, Richard Winkler, David Starr c/o Curious Pictures Corporation 440 Lafayette Street New York, New York 10003 Facsimile: (212) 674-0081 With copy to: David Wollmuth, Esq. WOLLMUTH, MAHER & DEUTSCH, LLP 516 Fifth Avenue, 12th Floor New York, New York 10036 Facsimile: (212) 382-0050 11.4. EXHIBITS. All Exhibits referred to herein are incorporated into this Agreement by reference for all purposes and shall be deemed part of this Agreement. 11.5. 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. 11.6. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the representatives, heirs, estates, successors, and assigns of the parties hereto. 11.7. 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. 11.8. 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. 11.9. 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/ Christopher T. Dahl By: /s/ James G. Gilbertson ----------------------- ----------------------- Its: Chief Executive Officer Its: Chief Operating Officer ----------------------- ----------------------- CURIOUS PICTURES CORPORATION a New York corporation By: /s/ James G. Gilbertson ----------------------- Its: Chief Operating Officer ----------------------- CP MANAGEMENT /s/ Stephen Oakes /s/ Richard Winkler - ----------------- ------------------- Stephen Oakes Richard Winkler /s/ David Starr /s/ Susan Holden - ----------------- ------------------- David Starr Susan Holden EX-99.3 4 CURIOUS STOCK AGREEMENT 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 SUSAN HOLDEN; STEPHEN OAKES; RICHARD WINKLER; AND DAVID STARR , 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: Mr. Christopher T. Dahl Children's Broadcasting Corporation 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 926-7946 with copy to: Jill Theis, Esq. Children's Broadcasting Corporation 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 925-8845 If to HHI: Mr. Christopher T. Dahl Harmony Holdings, Inc. 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 926-7946 with copy to: Jill Theis, Esq. Harmony Holdings, Inc. 5501 Excelsior Boulevard Minneapolis, Minnesota 55416 Facsimile: (612) 925-8845 If to CP Management: Susan Holden, Stephen Oakes, Richard Winkler, David Starr c/o Curious Pictures Corporation 440 Lafayette Street New York, New York 10003 Facsimile: (212) 674-0081 With copy to: David Wollmuth, Esq. WOLLMUTH, MAHER & DEUTSCH, LLP 516 Fifth Avenue, 12th Floor New York, New York 10036 Facsimile: (212) 382-0050 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 representatives, heirs, estates, 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/ Christopher T. Dahl By: /s/ James G. Gilbertson ----------------------- ----------------------- Its: Chief Executive Officer Its: Chief Operating Officer ----------------------- ----------------------- CP MANAGEMENT /s/ Stephen Oakes /s/ Richard Winkler - ----------------- ------------------- Stephen Oakes Richard Winkler /s/ David Starr /s/ Susan Holden - ----------------- ------------------- David Starr Susan Holden -----END PRIVACY-ENHANCED MESSAGE-----