SECURITIES ESCROW AGREEMENT
Exhibit
10.3
THIS
SECURITIES ESCROW AGREEMENT (the “Escrow Agreement”), dated as of September 17,
2008, is entered into by and among Sahara Media, Inc., a Delaware corporation
(“Sahara”), the shareholders of Sahara
listed on the signature pages hereto (the “Sahara Escrow
Shareholders”), Mac
Filmworks, Inc., a Delaware corporation whose stock is included for quotation on
the Over-the-Counter Bulletin Board (“Pubco”), and Sichenzia Xxxx Xxxxxxxx
Xxxxxxx LLP with an address at 00 Xxxxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000 (the “Escrow Agent”).
Capitalized
terms used but not defined herein shall have the meanings set forth in the
Merger Agreement (as defined below).
WITNESSETH:
WHEREAS,
the Sahara Escrow Shareholders collectively own 13,763,390 shares of Sahara’s
aggregate 18,250,000 issued and outstanding shares of common stock, par value
$0.00001 (“Sahara Common Stock”);
WHEREAS,
Sahara has entered into a merger agreement (the “Merger Agreement”) with Pubco
and Sahara Media Acquisitions, Inc., a Delaware corporation and a wholly owned
subsidiary of Pubco (the “Acquirer”), pursuant to which, at Closing, the
Acquirer shall be merged into and with Sahara, such that Sahara shall become a
wholly owned subsidiary of Pubco (the “Merger”), and all outstanding shares of
Sahara Common Stock shall automatically be cancelled and extinguished and
converted into the right to receive one share of common stock of Pubco, par
value $0.003 (the “Pubco Common Stock”) for one share of Sahara Common Stock
(the “Acquisition Shares”);
WHEREAS,
it is a condition precedent to the Closing of the Merger that Sahara
Shareholders shall enter into an escrow agreement pursuant to which 5,000,000 of
the Acquisition Shares shall be held in escrow;
WHEREAS,
the Sahara Escrow Shareholders have agreed to place the Escrow Shares (as
hereinafter defined) into escrow on the terms and conditions set forth in this
Escrow Agreement in the event Pubco fails to achieve certain performance
thresholds;
WHEREAS,
Sahara, Pubco and the Sahara Escrow Shareholders have requested that the Escrow
Agent hold the Escrow Shares on the terms and conditions set forth in this
Escrow Agreement and the Escrow Agent has agreed to act as escrow agent pursuant
to the terms and conditions of this Escrow Agreement.
NOW,
THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:
1
ARTICLE
I
TERMS OF
THE ESCROW
1.1. The
parties hereby agree to establish an escrow account with the Escrow Agent
whereby the Escrow Agent shall hold the Escrow Shares as contemplated by this
Agreement.
1.2. Within
five business days after the Effective Time of the Merger, the Sahara Escrow
Shareholders shall deliver or cause to be delivered to the Escrow Agent stock
certificates evidencing 5,000,000 shares of Pubco Common Stock (the “Escrow
Shares”), in accordance with Schedule A hereto, along with stock powers executed
in blank with signature medallion guaranteed.
1.3. The
parties hereby agree that the Escrow Shares shall be delivered to the Sahara
Escrow Shareholders, or returned to Pubco for cancellation, based on the
achievement of Pubco performance thresholds as set forth below:
(i) In the
event that Pubco has launched the online magazine Xxxxxxxx.xxx six months after
the Closing Date (the “First Performance Threshold”), 20% of the Escrow Shares
shall be released to the Sahara Escrow Shareholders. If the First Performance
Threshold is met, within five business days of the date that is six months after
the Closing Date, Pubco and the Sahara Escrow Shareholders shall provide written
instructions to the Escrow Agent instructing the Escrow Agent to deliver 20% of
the Escrow Shares to the Sahara Escrow Shareholders pro rata in accordance with
Schedule A. The Escrow Agent shall deliver such Escrow Shares in accordance with
such instructions. If the First Performance Threshold is not met, within five
business days of the date that is six months after the Closing Date, Pubco and
the Sahara Escrow Shareholders shall provide written instructions to the Escrow
Agent to return 20% of the Escrow Shares to Pubco, and Pubco shall cancel such
Escrow Shares forthwith. The Escrow Agent shall deliver such Escrow Shares in
accordance with such instructions.
2
(ii) In the
event that Pubco has launched the social network Xxxxxxxxxxx.xxx seven months
after the Closing Date (the “Second Performance Threshold”), 20% of the Escrow
Shares shall be released to the Sahara Escrow Shareholders. If the Second
Performance Threshold is met, within five business days of the date that is
seven months after the Closing Date, Pubco and the Sahara Escrow Shareholders
shall provide written instructions to the Escrow Agent instructing the Escrow
Agent to deliver 20% of the Escrow Shares to the Sahara Escrow Shareholders pro
rata in accordance with Schedule A. The Escrow Agent shall deliver such Escrow
Shares in accordance with such instructions. If the Second Performance Threshold
is not met, within five business days of the date that is six months after the
Closing Date, Pubco and the Sahara Escrow Shareholders shall provide written
instructions to the Escrow Agent to return 20% of the Escrow Shares to Pubco,
and Pubco shall cancel such Escrow Shares forthwith. The Escrow Agent shall
deliver such Escrow Shares in accordance with such instructions.
(iii) In the
event that, from the period from the launch of the online magazine Xxxxxxxx.xxx,
until nine months after the Closing Date, the average number of monthly viewer
impressions of Pubco’s online magazine Xxxxxxxx.xxx is at least 300,000 (the
“Third Performance Threshold”), 20% of the Escrow Shares shall be released to
the Sahara Escrow Shareholders. If the Third Performance Threshold is met,
within five business days of the date that is nine months after the Closing
Date, Pubco and the Sahara Escrow Shareholders shall provide written
instructions to the Escrow Agent instructing the Escrow Agent to deliver 20% of
the Escrow Shares to the Sahara Escrow Shareholders pro rata in accordance with
Schedule A. The Escrow Agent shall deliver such Escrow Shares in accordance with
such instructions. If the Third Performance Threshold is not met, within five
business days after the date that is nine months after the Closing Date, Pubco
and the Sahara Escrow Shareholders shall provide written instructions to the
Escrow Agent to return 20% of the Escrow Shares to Pubco, and Pubco shall cancel
such Escrow Shares forthwith. The Escrow Agent shall deliver such Escrow Shares
in accordance with such instructions.
(iv) In the
event that Pubco’s social networking site Xxxxxxxxxxx.xxx has at least 200,000
registered users on September 30, 2009 (the “Fourth Performance Threshold”), 20%
of the Escrow Shares shall be released to the Sahara Escrow Shareholders. If the
Fourth Performance Threshold is met, within five business days of September 30,
2009, Pubco and the Sahara Escrow Shareholders shall provide written
instructions to the Escrow Agent instructing the Escrow Agent to deliver 20% of
the Escrow Shares to the Sahara Escrow Shareholders pro rata in accordance with
Schedule A. The Escrow Agent shall deliver such Escrow Shares in accordance with
such instructions. If the Fourth Performance Threshold is not met, within five
business days of September 30, 2009, Pubco and the Sahara Escrow Shareholders
shall provide written instructions to the Escrow Agent to return 20% of the
Escrow Shares to Pubco, and Pubco shall cancel such shares forthwith. The Escrow
Agent shall deliver such Escrow Shares in accordance with such
instructions.
(v) In the
event that, Pubco either has revenue of at least $1,000,000 for the year ending
December 31, 2009, or accounts receivable of at least $1,000,000 as of December
31, 2009, as disclosed in Pubco’s audited financial statements included in
Pubco’s Form 10-K for the year ending December 31, 2009 filed with the
Securities and Exchange Commission (the “Fifth Performance Threshold”), 20% of
the Escrow Shares shall be released to the Sahara Escrow Shareholders. If the
Fifth Performance Threshold is met, within five business days after the filing
of Pubco’s Form 10-K for the year ending December 31, 2009, Pubco shall provide
written instructions to the Escrow Agent instructing the Escrow Agent to deliver
20% of the Escrow Shares to the Sahara Escrow Shareholders pro rata in
accordance with Schedule A. The Escrow Agent shall deliver such Escrow Shares in
accordance with such instructions. If the Fifth Performance Threshold is not
met, within five business days after the filing of Pubco’s Form 10-K for the
year ending December 31, 2009, Pubco shall provide written instructions to the
Escrow Agent to return 20% of the Escrow Shares to Pubco, and Pubco shall cancel
such Escrow Shares forthwith. The Escrow Agent shall deliver such Escrow Shares
in accordance with such instructions.
3
ARTICLE
II
MISCELLANEOUS
2.1 Upon execution of this Agreement,
Sahara shall pay Escrow Agent a total of $5,000 for all services rendered by
Escrow Agent hereunder.
2.2 No
waiver or any breach of any covenant or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof, or of any other
covenant or provision herein contained. No extension of time for performance of
any obligation or act shall be deemed an extension of the time for performance
of any other obligation or act.
2.3 All
notices, demands, consents, requests, instructions and other communications to
be given or delivered or permitted under or by reason of the provisions of this
Agreement or in connection with the transactions contemplated hereby shall be in
writing and shall be deemed to be delivered and received by the intended
recipient as follows: (i) if personally delivered, on the business day of such
delivery (as evidenced by the receipt of the personal delivery service), (ii) if
mailed certified or registered mail return receipt requested, two (2) business
days after being mailed, (iii) if delivered by overnight courier (with all
charges having been prepaid), on the business day of such delivery (as evidenced
by the receipt of the overnight courier service of recognized standing), or (iv)
if delivered by facsimile transmission, on the business day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding business day (as evidenced by the printed confirmation of
delivery generated by the sending party’s telecopier machine). If any
notice, demand, consent, request, instruction or other communication cannot be
delivered because of a changed address of which no notice was given (in
accordance with this Section 2), or the refusal to accept same, the notice,
demand, consent, request, instruction or other communication shall be deemed
received on the second business day the notice is sent (as evidenced by a sworn
affidavit of the sender). All such notices, demands, consents,
requests, instructions and other communications will be sent to the following
addresses or facsimile numbers as applicable.
If to
Escrow
Agent: Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx, 00xx
Xxxxx,
Xxx Xxxx,
XX 00000
Attention:
Xxxx Xxxx, Esq.
Tel
No.:000-000-0000
Fax No.:
000-000-0000
If to
Sahara:
Sahara
Media, Inc.
00
Xxxxxxxx Xxxxxx, 0xx
Xxxxx
Xxx Xxxx,
XX 00000
Tel No.
000-000-0000
Fax No.
000-000-0000
4
With a
copy to:
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00
Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
Attention: Xxxx
Xxxx, Esq.
Tel.
No.: 000-000-0000
Fax
No.: 000-000-0000
If to
Pubco:
Mac Filmworks, Inc.
00 Xxxxxxxx Xxxxxx, 0xx
XxxxxXxx Xxxx,
Xxx Xxxx 00000
Fax: 000
000-0000
Phone: 000 000-0000
If to the
Sahara Escrow Shareholders:
In accordance with the addresses listed
on the signature pages hereto.
or to
such other address and to the attention of such other person as any of the above
may have furnished to the other parties in writing and delivered in accordance
with the provisions set forth above.
2.4 This Escrow Agreement shall be
binding upon and shall inure to the benefit of the permitted successors and
permitted assigns of the parties.
2.5 This
Escrow Agreement is the final expression of, and contains the entire agreement
between, the parties with respect to the subject matter hereof and supersedes
all prior understandings with respect thereto. This Escrow Agreement may not be
modified, changed, supplemented or terminated nor may any obligations hereunder
be waived, except by written instrument signed by the parties to be charged or
by its agent duly authorized in writing or as otherwise expressly permitted
herein, provided, however, Section 1.3 of this Agreement may not be amended
without the consent of the Sahara Escrow Shareholders, Pubco, the Escrow Agent
and Xxxx Xxxxxx Bridge & Opportunity Fund, which consent may not be
unreasonably withheld.
2.6 Whenever
required by the context of this Escrow Agreement, the singular shall include the
plural and masculine shall include the feminine. This Escrow Agreement shall not
be construed as if it had been prepared by one of the parties, but rather as if
both parties had prepared the same. Unless otherwise indicated, all references
to Articles are to this Escrow Agreement.
2.7 The parties hereto expressly
agree that this Escrow Agreement shall be governed by, interpreted under and
construed and enforced in accordance with the laws of the State of New York,
without regard to conflicts of law principles that would result in the
application of the substantive laws of another jurisdiction. Any action to
enforce, arising out of, or relating in any way to, any provisions of this
Escrow Agreement shall only be brought in a state or Federal court sitting in
New York City, Borough of Manhattan.
5
2.8 The Escrow Agent’s duties
hereunder may be altered, amended, modified or revoked only by a writing signed
by Pubco, the Sahara Escrow Shareholders, Sahara and the Escrow
Agent.
2.9 The Escrow Agent shall be
obligated only for the performance of such duties as are specifically set forth
herein and may rely and shall be protected in relying or refraining from acting
on any instrument reasonably believed by the Escrow Agent to be genuine and to
have been signed or presented by the proper party or parties. The Escrow Agent
shall not be personally liable for any act the Escrow Agent may do or omit to do
hereunder as the Escrow Agent while acting in good faith and in the absence of
gross negligence, fraud and willful misconduct, and any act done or omitted by
the Escrow Agent pursuant to the advice of the Escrow Agent’s attorneys-at-law
shall be conclusive evidence of such good faith, in the absence of gross
negligence, fraud and willful misconduct.
2.10 The Escrow Agent is hereby
expressly authorized to disregard any and all warnings given by any of the
parties hereto or by any other person or corporation, excepting only orders or
process of courts of law and is hereby expressly authorized to comply with and
obey orders, judgments or decrees of any court. In case the Escrow Agent obeys
or complies with any such order, judgment or decree, the Escrow Agent shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without
jurisdiction.
2.11 The Escrow Agent shall not be
liable in any respect on account of the identity, authorization or rights of the
parties executing or delivering or purporting to execute or deliver any
documents or papers deposited or called for thereunder in the absence of gross
negligence, fraud and willful misconduct.
2.12 The Escrow Agent shall be
entitled to employ such legal counsel and other experts as the Escrow Agent may
deem necessary properly to advise the Escrow Agent in connection with the Escrow
Agent’s duties hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor which shall be paid by the Escrow
Agent. The Escrow Agent has
acted as legal counsel for Sahara, may continue to act as legal counsel for
Sahara from time to time, and may act as legal counsel for Pubco from time to
time, notwithstanding its duties as the Escrow Agent hereunder. Pubco and the
Sahara Escrow Shareholders, as applicable, consent to the Escrow Agent in such
capacity as legal counsel for Sahara and Pubco, as applicable, and waive any
claim that such representation represents a conflict of interest on the part of
the Escrow Agent. Pubco and the Sahara Escrow Shareholders understand that the
Escrow Agent is relying explicitly on the foregoing provision in entering into
this Escrow Agreement.
2.13 The Escrow Agent’s
responsibilities as escrow agent hereunder shall terminate if the Escrow Agent
shall resign by giving written notice to Pubco and the Sahara Escrow
Shareholders. In the event of any such resignation, Pubco and the Sahara Escrow
Shareholders shall appoint a successor Escrow Agent and the Escrow Agent shall
deliver to such successor Escrow Agent any Escrow Shares and other documents
held by the Escrow Agent. If Pubco and the Sahara Escrow Shareholders shall fail
to appoint a successor Escrow Agent upon resignation of the Escrow Agent in
accordance with this Section 2.13, the Escrow Agent is authorized and directed
in the Escrow Agent’s sole discretion (1) to retain in the Escrow Agent’s
possession the Escrow Shares and any other documents or property held by the
Escrow Agent hereunder, until Pubco and the Sahara Escrow Shareholders appoint a
successor Escrow Agent, or (2) to deliver the Escrow Shares and any other
property and documents held by the Escrow Agent hereunder to a state or Federal
court having competent subject matter jurisdiction and located in the City of
New York, Borough of Manhattan, in accordance with the applicable procedure
therefor.
6
2.14 If the Escrow Agent reasonably
requires other or further instruments in connection with this Escrow Agreement
or obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.
2.15 It is understood and agreed
that should any dispute or question arise with respect to the delivery and/or
ownership or right of possession of the documents or the Escrow Shares held by
the Escrow Agent hereunder, the Escrow Agent is authorized and directed in the
Escrow Agent’s sole discretion (1) to retain in the Escrow Agent’s possession
without liability to anyone all or any part of said documents or the Escrow
Shares until such disputes or questions shall have been settled either by mutual
written agreement of the parties concerned or by a final order, decree or
judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be under no
duty whatsoever to institute or defend any such proceedings or (2) to deliver
the Escrow Shares and any other property and documents held by the Escrow Agent
hereunder to a state or Federal court having competent subject matter
jurisdiction and located in the City of New York, Borough of Manhattan, in
accordance with the applicable procedure therefor.
2.16 Pubco, Sahara and the Sahara
Escrow Shareholders agree to jointly and severally indemnify and hold harmless
the Escrow Agent and its partners, employees, agents and representatives from
any and all claims, liabilities, costs or expenses in any way arising from or
relating to the duties or performance of the Escrow Agent hereunder or the
transactions contemplated hereby or by the Merger Agreement other than any such
claim, liability, cost or expense to the extent the same shall have been
determined by final, unappealable judgment of a court of competent jurisdiction
to have resulted from the gross negligence, fraud or willful misconduct of the
Escrow Agent.
[Signature
Page Follows]
7
[SIGNATURE
PAGE TO SECURITIES ESCROW AGREEMENT]
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of this 17th
day of September, 2008.
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Mac
Filmworks, Inc.
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| By: |
/s/
Xxxxxx Xxxxxxxx
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Name:
Xxxxxx Xxxxxxxx
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Title:
Chief Executive Officer
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ESCROW
AGENT:
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Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
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| By: |
/s/
Xxxx Xxxx
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Name:
Xxxx Xxxx
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Title:
Partner
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Sahara
Media, Inc.
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| By: |
/s/
Xxxxxxxx Xxxxxxxx XX
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Name:
Xxxxxxxx Xxxxxxxx XX
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Title:
Chief Executive Officer
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| SAHARA ESCROW SHAREHOLDERS: | |||||
| SE, LLC | |||||
| By: |
/s/
Xxxxxxxx Xxxxxxxx XX
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Name:
Xxxxxxxx Xxxxxxxx XX
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Title:
Chief Executive Officer
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| Agreed and Accepted with Respect to Section 2.5 hereof: | |||||
| Xxxx Xxxxxx Bridge & Opportunity Fund | |||||
| By: |
/s/
Xxxxxx X. Xxxxxxx, Xx.
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Name:
Xxxxxx X. Xxxxxxx, Xx.
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Title:
Managing Partner
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8
Schedule
A
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Sahara
Escrow Shareholder
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Escrow
Shares
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SE,
LLC
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5,000,000
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9
