Exhibit 10.12
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of July 21, 2003, by and among Xxxxxx &
Xxxxxxxxx LLP, as escrow agent ("Escrow Agent"), Tele-V, Inc., a New York
corporation whose principal business address is 1120 Avenue of the Americas,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 ("Tele") and its subsidiaries and
affiliates--Genio Cards LLC, Tele-V, LLC, and Tele-V Media LLC, each a Delaware
limited liability company with a principal business address located at 1120
Avenue of the Americas, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 ("Genio", "TVLLC"
and "TV Media", respectively, and collectively with Tele, "TV") and Xxxx
Xxx-Xxxx, an officer, director and significant shareholder of Tele (the
"Principal Seller") and the remaining stockholders of Tele whose names are set
forth on the signature pages annexed hereto and National Management Consulting,
Inc., a Delaware corporation whose principal business address is 000 Xxxxxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("National").
WITNESSETH
WHEREAS, the Principal Seller and the remaining shareholders of Tele
(collectively, the "Sellers") are the owners of all of the issued and
outstanding common stock of Tele (the "Tele Common Stock") and Tele is the sole
member of Genio, TVLLC and TV Media, respectively (the "Genio Membership
Interests", the "TVLLC Membership Interests", and the "TV Media Membership
Interests", respectively and collectively, the "Membership Interests"); and
WHEREAS, Tele and the Principal Seller and National are parties to that
certain Stock Purchase Agreement dated as of July 9, 2003 (the "Purchase
Agreement"), pursuant to which National has agreed to acquire all of the Tele
Common Stock in exchange for common stock of National as more fully set forth in
the Purchase Agreement (collectively, the "Acquisition"); and
WHEREAS, the Purchase Agreement provides for the establishment of an
escrow account for the escrowing of certain shares of the National common stock
to be issued in connection with the Acquisition with an escrow agent for
potential release to the Sellers in the event that the business of TV (the
"Business") attains certain revenue and EBITDA targets during prescribed
periods; and
WHEREAS, the Escrow Agent has agreed to act as the escrow agent with
respect to the shares of National common stock to be escrowed in accordance with
the Purchase Agreement on the terms set forth herein.
NOW, THEREFORE, for good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties do hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
1
2. Appointment. The Escrow Agent shall act as the escrow agent as set
forth herein, and as such shall receive, acknowledge receipt,
retain, release and deliver the Escrowed Shares on the terms, and
subject to the conditions, set forth herein.
3. Rights, Duties and Immunities.
(a) The duties and obligations of the Escrow Agent shall be
determined solely by the express provisions of this Agreement.
The Escrow Agent shall not be liable except for the
performance of such duties and obligations as are specifically
set out in this Agreement, and the Escrow Agent shall not be
deemed to have any knowledge of, or responsibility for, the
terms of any other agreement, instrument or document.
(b) The Escrow Agent shall not be responsible in any manner
whatsoever for any failure or inability of any party hereto,
or of any one else, to deliver documents to the Escrow Agent
or otherwise to honor any of the provisions of this Agreement
or otherwise.
(c) Except as provided in Section 7(b) below, the Tele, Genio,
TVLLC, TV Media, the Principal Seller and National will
indemnify the Escrow Agent for, and defend and hold it
harmless against, any loss, liability or expense (including
but not limited to attorneys' fees and disbursements) arising
out of or in connection with, its acceptance of or the
performance of its duties and obligations under or the
interpretation of this Agreement; provided, however, that this
Section 3(c) shall not apply to losses, liabilities and
expenses caused by the bad faith, willful misconduct or gross
negligence of the Escrow Agent.
(d) The Escrow Agent shall be entitled to rely upon any judgment,
certification, demand, notice, instrument or other writing
delivered to it hereunder without being required to determine
the authenticity or the correctness of any fact stated therein
or the propriety or validity or the service thereof. The
Escrow Agent shall be fully protected in acting on and relying
upon any written notice, direction, request, waiver, consent,
receipt or other paper or document which the Escrow Agent
believes to be genuine. The Escrow Agent may act in reliance
upon any instrument or signature it reasonably believes to be
genuine and the Escrow Agent may assume that any person
purporting to give any advice or make any statement in
connection with the provisions hereof has been duly authorized
to do so.
(e) The Escrow Agent shall not be liable for any error of
judgment, or
2
for any act done or step taken or omitted by it in good faith,
or for any mistake of fact or law, or for anything which it
may do or refrain from doing in connection herewith, except
its own bad faith, willful misconduct or gross negligence.
(f) The Escrow Agent may seek the advice of legal counsel as to
any question arising from or relating to the construction of
any of the provisions of this Agreement or its duties or
obligations hereunder or otherwise, and it shall incur no
liability and shall be fully protected in respect of any
action taken, omitted or suffered by it in good faith in
accordance with the advice of such counsel.
(g) The Escrow Agent does not make and will not be required or
deemed to make any representation as to the validity or
genuineness of any agreement, document or other instrument
held by or delivered to it.
(h) If a dispute arises between one or more of the parties hereto,
or between any of the parties hereto and any person not a
party hereto, as to whether or not or to whom the Escrow Agent
shall deliver any of the Escrowed Shares or as to any other
matter arising from or relating to the Escrowed Shares or this
Agreement, the Escrow Agent shall not be required to determine
such dispute and need not make any delivery of any of the
Escrowed Shares, but will retain the same until the rights of
the parties to the dispute shall have finally been determined
by written agreement among the parties to the dispute or by
final non-appealable order of a court of competent
jurisdiction. In the event that the Escrow Agent has received
notice of such order or any such agreement, the Escrow Agent
shall cause the Escrowed Shares to be released and delivered
in accordance with such agreement or order and in accordance
with Section 5 below.
(i) The Escrow Agent shall be entitled to assume that no dispute
of the type referred to in Section 3(h) has arisen unless it
has received a written notice that such a dispute has arisen,
which written notice refers specifically to this Agreement and
identifies by name and address the adverse claimants in such
dispute. Any party delivering written notice of a dispute
pursuant to this Section 3(i) shall simultaneously therewith
deliver a copy of such notice to all parties hereto in
accordance with Section 10 hereof, with such copies to such
persons as are specified therein. For purposes of this Section
3(i), the Escrow Agent shall not be deemed to have received a
written notice until all parties to this Agreement have
received such written notice. If a dispute of the type
referred to in Section 3(h) arises, the Escrow Agent may, in
its sole discretion
3
(but shall not be obligated to), commence interpleader or
similar actions or proceedings for determination of such
dispute.
4. Delivery to Escrow of the Escrowed Shares.
(a) At the closing of the Acquisition (the "Acquisition Closing"),
2,157,667 shares of National common stock (the "Escrowed
Shares") shall be escrowed with the Escrow Agent.
5. Release of Escrow. The Escrow Agent shall hold, release and deliver
the Escrowed Shares as follows:
(a) If at any time the Escrow Agent receives a written
certification from the chief financial officer of National or
from the Accounting Firm authorizing the release of some or
all of the Escrowed Shares, then the Escrow Agent shall
deliver the amount of Escrowed Shares set forth in such
certification (the "Certification") to the Sellers with each
Seller to receive the percentages of the Escrowed Shares as
set forth in Schedule A annexed hereto so long as the Escrow
Agent does not receive an objection from National within three
business days of the Escrow Agent giving National written
notice of its receipt of the Certification.
(b) In the event that National raises an objection to the release
of any of the Escrowed Shares, the Escrow Agent shall release
such of the Escrowed Shares, if any, as are not in controversy
and shall continue to hold the remaining Escrowed Shares until
it receives the joint written instructions of National and
Tele.
(c) Any party delivering written instructions or objections
pursuant to Sections 5(a) or (b) above to the Escrow Agent
shall, simultaneously therewith, deliver a copy of such
instructions to all other parties at their respective
addresses set forth in Section 10 below, with such copies to
such persons as are specified therein. For purposes of
Sections 5(a) or (b), written instructions or objections shall
not be deemed to have been received by the Escrow Agent until
such time as a copy thereof has been received by each party
hereto other than the party delivering such instructions. In
addition, the Escrow Agent shall deliver a copy of each such
instructions and objections to the other parties.
(d) Upon receipt of a Certification that all of the Escrowed
Shares may be released to the Sellers, and the absence of any
objection thereto as provided in Section 5(a) above, the
Escrow Agent shall promptly transmit the Escrowed Shares then
in its possession to the Sellers and the escrow account shall
be terminated with no further action required by any party
hereto.
4
(e) In the event that any Escrowed Shares are not released to the
Sellers after the expiration of the Second Period in
accordance with the provisions of this Section 5, such
Escrowed Shares shall be deemed to be forfeited and all
forfeited Escrowed Shares shall be delivered by the Escrow
Agent to National for cancellation.
6. Successor Escrow Agent.
(a) The Escrow Agent may, at any time, resign as such with or
without the prior written consent of all the parties hereto,
in which case the Escrow Agent (and any successor escrow
agent) shall deliver the Escrowed Shares to any successor
escrow agent jointly designated by National and the Sellers in
writing, or to any court of competent jurisdiction, whereupon
the Escrow Agent shall be discharged of and from any and all
further duties and obligations arising in connection with this
Agreement. The resignation of the Escrow Agent shall take
effect on the earlier of (i) the appointment of a successor
escrow agent, or (ii) the day which is 30 days after the date
of the delivery of the Escrowed Shares and a copy of this
Agreement to any court of competent jurisdiction. In the event
that a successor escrow agent has not been appointed at the
expiration of such 30-day period, the Escrow Agent's sole
responsibilities hereunder shall be: (i) to maintain the
safekeeping of the Escrowed Shares and any other documents
delivered to it hereunder, if any, and (ii) to release and
deliver the Escrowed Shares and any such documents in
accordance with Section 5 of this Agreement.
(b) If the Escrow Agent receives a written notice signed by
National and the Sellers stating that they have selected a
successor escrow agent, the Escrow Agent shall deliver the
Escrowed Shares (and any other documents then held by it
hereunder, if any) to the successor escrow agent named in the
aforesaid notice within 15 days after receipt of such written
notice.
7. Fees and Costs of the Escrow Agent.
(a) The Escrow Agent shall be entitled to the reimbursement of any
reasonable expenses (including but not limited to attorneys'
fee and disbursements) actually incurred by it in the
performance of its duties hereunder. Without limiting any
other provision of this Agreement, the amount of such
reimbursements will be borne by National, except as provided
in paragraph 7(b) below.
(b) Notwithstanding any provision in this Agreement to the
contrary, if National, Tele, Genio, TVLLC, TV Media or the
Sellers are determined to be in breach of or default under any
of the
5
provisions hereof, or has been determined by a court of
competent jurisdiction to have delivered any written notice or
instructions in bad faith or containing untrue statements,
then such party shall bear: (i) all the costs and expenses of
the Escrow Agent required to be paid by any party hereunder,
and (ii) all costs and expenses (including but not limited to
attorneys' fees and disbursements) incurred by each other
party as a result of, or in connection with, such breach,
default or dispute, or written notice or instruction;
provided, however, that the foregoing shall not affect the
Escrow Agent's right to seek payment from any party hereunder.
8. Voting Rights and/or Dividends. Notwithstanding any provision
to the contrary in this Agreement or elsewhere, during the
time that the Escrowed Shares are held in escrow by the Escrow
Agent in accordance with this Agreement, Sellers or their
designees shall be entitled to exercise any and all voting
and/or other consensual rights accruing to the owner thereof
and to receive all dividends and other distributions made
thereupon.
9. Construction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the
State of New York, without regard to such State's principles
of conflicts of law.
10. Notices. All notices, demands, requests, consents, approvals,
reports or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and if
such notice is given pursuant to Section 5 hereof, such notice
shall be delivered to the following addresses (or such other
address as the recipient party may hereafter specify in the
same manner):
To National: National Management Consulting,
Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx X. Xxxxxxxx, President
Facsimile: (000) 000-0000
With a Copy To: Xxxx X'Xxxxxx, Esq.
C/o Adelphia Capital LLCi;pitc
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
6
To Tele, Genio, TVLLC,
TV Media and Sellers: Xxxx Xxx-Xxxx
c/o Tele-V, Inc.
1126 Avenue of the Americas,
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
To Escrow Agent: Xxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Except as otherwise provided in Sections 3(i) and 5(c) hereof, all such
instructions, objections, notices, requests, consents and other communications,
if sent via facsimile shall be deemed to have been given when received, if sent
by overnight courier shall be deemed to have been given one (1) business day
after deposit with such overnight courier and if sent via U.S. mail, shall be
deemed to have been given three (3) business days after deposit in a U.S. postal
depository, certified mail, return receipt requested.
11. Xxxxxx & Xxxxxxxxx LLP.
(a) Each party acknowledges that Xxxxxx & Xxxxxxxxx LLP has acted
as legal counsel to and representative of National and its
respective affiliates and agrees that such counsel and
representation do not and will not constitute a grounds for
disqualifying Xxxxxx & Xxxxxxxxx LLP from acting as Escrow
Agent hereunder.
(b) Notwithstanding anything to contrary contained herein, it is
expressly understood by the parties hereto that the Escrow
Agent, in that capacity, at any time that it is required or
permitted to seek legal counsel under this Agreement, may seek
such legal counsel from Xxxxxx & Xxxxxxxxx LLP, and that
either National or Tele, Genio, TVLLC, TV Media or the Sellers
will be liable (as provided in Sections 3(c), 7(a) and 7(b))
to Xxxxxx & Xxxxxxxxx LLP for any services performed and
billed to the Escrow Agent by Xxxxxx & Xxxxxxxxx LLP at its
customary hourly rates and all of Xxxxxx & Xxxxxxxxx LLP's
disbursements in connection with the provision of such
services.
12. Headings. The headings of the sections of this Agreement are
inserted as a matter of convenience and for reference purposes only,
are of no binding effect, and in no respect define, limit or
describe the scope of this
7
Agreement or the intent of any section.
13. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each were
upon the same instrument.
14. Entire Agreement. This Agreement represents the entire understanding
and agreement between the parties with respect to the subject matter
hereof, supersedes all prior negotiations between the parties, and
can be amended, modified, supplemented, extended, terminated,
discharged or changed only by an agreement in writing which makes
specific reference to this Agreement and which is signed by all
parties.
15. Successors and Assigns. This Agreement shall be binding upon and
inure solely to the benefit of the parties and their respective
permitted successors and assigns and shall not be enforceable by or
create or evidence any right of any third party. Sellers shall be
entitled to assign this Escrow Agreement and all of their rights,
privileges, interests, and remedies hereunder to any other person,
firm, entity, bank, or corporation whatsoever without notice to or
consent by National and such assignee shall be entitled to the
benefits of this Escrow Agreement and to exercise all such rights,
interests, and remedies as fully as the Sellers. National may not
assign this Escrow Agreement without the express written consent of
the Sellers which may be withheld in its sole discretion.
16. Severability. Any provision of this Agreement that may be determined
by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. It is expressly understood, however, that the parties
intend each and every provision of this Agreement to be valid and
enforceable and hereby knowingly waive all rights to object to any
provision of this Agreement.
17. Further Assurances. Each of the parties agrees that it shall use its
good faith efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary to consummate and make
effective this Agreement.
8
[SIGNATURE PAGE TO ESCROW AGREEMENT]
IN WITNESS WHEREOF, the parties have caused this Escrow Agreement to be
executed as of the date first above written.
Xxxxxx & Xxxxxxxxx LLP
As Escrow Agent
By:_______________________________
Xxxxxxx Xxxxxx, Esq.
NATIONAL MANAGEMENT
CONSULTING, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President and Chairman
TELE-V, INC.
By: /s/ Xxxx Xxx-Xxxx
-------------------------------
Name: Xxxx Xxx-Xxxx
Title: President
PRINCIPAL SHAREHOLDER OF TELE-V,
INC.
By: /s/ Xxxx Xxx-Xxxx
-------------------------------
Xxxx Xxx-Xxxx
REMAINING SHAREHOLDERS OF TELE-V,
INC.
/s/ Xxxx Xxxxx Xxx-Xxxx
----------------------------------
Xxxx Xxxxx Xxx-Xxxx
/s/ Xxxx Xxx-Xxxx
----------------------------------
Xxxx Xxx-Xxxx as
co-trustee for Xxxxxxxxx Xxxxx
Xxx-Xxxx
9
[CONTINUED SIGNATURE PAGE TO ESCROW AGREEMENT]
/s/ Xxxx Xxxxx Xxx-Xxxx
----------------------------------
Xxxx Xxxxx Xxx-Xxxx as co-trustee
For Xxxxxxxxx Xxxxx Xxx-Xxxx
/s/ Xxxx Xxx-Xxxx
----------------------------------
Xxxx Xxx-Xxxx as
cotrustee for Xxxxxxx Xxxxx
Xxx-Xxxx
/s/ Xxxx Xxxxx Xxx-Xxxx
----------------------------------
Xxxx Xxxxx Xxx-Xxxx as co-trustee
For Xxxxxxx Xxxxx Xxx-Xxxx
/s/ Xxxx Xxx-Xxxx
----------------------------------
Xxxx Xxx-Xxxx as co-trustee for
Xxxxxx Xxxxx Xxx-Xxxx
/s/ Xxxx Xxxxx
----------------------------------
Xxxx Xxxxx
Xxx-Xxxx as co-trustee
for Xxxxxx Xxxxx Xxx-Xxxx
/s/ Xxxx Xxx-Xxxx
----------------------------------
Xxxx Xxx-Xxxx as trustee for
JEG Group Ltd.
/s/ Xxxx Xxx-Xxxx
----------------------------------
Xxxx Xxx-Xxxx as trustee for
JEG Group Ltd.
/s/ Xxxx Xxx-Xxxx
----------------------------------
Xxxx Xxx-Xxxx as trustee for
JEG Group Ltd.
10
SCHEDULE A
The percentage ownership of the Escrow Shares is as follows:
Shareholder % ownership
----------- -----------
Xxxx Xxx-Xxxx 5%
Xxxx Xxxxx Xxx-Xxxx 12.5%
Xxxx Xxx Xxxx and Xxxx Xxxxx
Xxx-Xxxx, as co-trustees for
Xxxxxxxxx Xxxxx Xxx-Xxxx 2.5%
Xxxx Xxx-Xxxx and Xxxx Xxxxx
Xxx-Xxxx, as co-trustees for
Xxxxxxx Xxxxx Xxx-Xxxx 2.5%
Xxxx Xxx-Xxxx and Xxxx Xxxxx
Xxx-Xxxx, as co-trustees for
Xxxxxx Xxxxx Xxx-Xxxx 2.5%
Xxxx Xxx-Xxxx, as trustee for
JEG Group Ltd. 25%
Xxxx Xxx-Xxxx, as trustee for
JEG Group Ltd. 25%
Xxxx Xxx-Xxxx, as trustee for
JEG Group Ltd. 25%
11
