EXHIBIT 10.3
JOINT ESCROW INSTRUCTIONS
Dated as of the date of the Securities
Purchase Agreement to
Which These Joint Escrow
Instructions Are Attached
Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Attention: Samuel M. Krieger, Esq.
Dear Mr. Krieger:
As escrow agent for both Kideo Productions, Inc., a Delaware
corporation (the "Company"), and the Purchaser (the "Purchaser") of Series A 6%
Convertible Participating Preferred Stock of the Company (the "Series A
Preferred Stock"), who is named in the Securities Purchase Agreement between the
Company and the Purchaser to which a copy of these Joint Escrow Instructions is
attached as Annex II (the "Agreement"), you (hereafter, the "Escrow Agent") are
hereby authorized and directed to hold the documents and funds (together with
any interest thereon, the "Escrow Funds") delivered to the Escrow Agent pursuant
to the terms of the Agreement in accordance with the following instructions:
1. The Escrow Agent shall, as promptly as feasible, notify the Company
of receipt of the purchase price from the Purchaser, and notify the Purchaser
(or such agent as the Purchaser may designate in writing) of receipt of the
Series A Preferred Stock being purchased for such purchase price. Within not
more than two (2) days of receipt of written notice from the Company and the
Purchaser that the respective conditions precedent to the purchase and sale have
been satisfied (which notice shall not be unreasonably withheld), the Escrow
Agent shall, after reduction by the amounts referred to in the next succeeding
sentence of this paragraph, release the Escrow Funds to or upon the order of the
Company, and shall release the Series A Preferred Stock to the Purchaser. After
receipt of such notice, a portion of the Escrow Funds shall be released by the
Escrow Agent as follows: an amount equal to 5% of the purchase price of the
Series A Preferred Stock shall be released to Gerard Klauer Mattison & Co, Inc.,
and $7,500 for tranche I and $3,000 for each additional tranche of the Escrow
Funds to the Escrow Agent. If a certificate representing such Series A Preferred
Stock is not deposited with the Escrow Agent within ten (10) days after receipt
by the Company of notice of receipt by the Escrow Agent of the funds from the
Purchaser, Escrow Agent shall notify the Purchaser and Purchaser shall be
entitled to cancel the
subscription and demand repayment of the funds. If such funds are not deposited
with the Escrow Agent within ten (10) days after receipt by the Purchaser of
notice of receipt by the Escrow Agent of such stock certificate from the
Company, Escrow Agent shall notify the Company and the Company shall be entitled
to cancel the subscription and demand return of such stock certificate. If the
Company or the Purchaser notifies the Escrow Agent that on the Closing Date (as
defined in the Agreement) the conditions precedent to the obligations of the
Company or the Purchaser, as the case may be, under the Agreement were not
satisfied or waived, then the Escrow Agent shall return the Escrow Funds to the
Purchaser and shall return the such stock certificate to the Company. Prior to
return of the Escrow Funds to the Purchaser, the Purchaser shall furnish such
tax reporting or other information as shall be appropriate for the Escrow Agent
to comply with applicable United States laws. The Escrow Agent shall deposit all
funds received hereunder in the Escrow Agent's attorney escrow account at The
Bank of New York.
2. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, the Purchaser and
the Escrow Agent.
3. 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 Escrow Agent while acting
in good faith, except for fraud, willful misconduct, or gross negligence, and
any act done or omitted by the Escrow Agent pursuant to the advice of the Escrow
Agent's attorneys-at-law shall be evidence of such good faith.
4. 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.
5. The Escrow Agent shall not be liable in any respect on account of
the identity, authorities or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
6. 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. The Escrow Agent has acted as legal counsel for Purchaser
(as that term is defined in the Agreement) in connection with the Agreement and
may continue to act as legal counsel for Purchaser, from time to time,
notwithstanding its duties as Escrow Agent hereunder.
7. The Escrow Agent's responsibilities as Escrow Agent hereunder shall
terminate if the Escrow Agent shall resign by written notice to the Company and
the Purchaser. In the event of any such resignation, the Purchaser and the
Company shall appoint a successor Escrow Agent.
8. If the Escrow Agent reasonably requires other or further instruments
in connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
9. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the documents
or Escrow Funds 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 Escrow Funds until such disputes 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 Funds 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 State and City of New York in accordance
with the applicable procedure therefor.
10. The Company and the Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent 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 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 fraud, gross negligence or willful misconduct of the Escrow Agent.
11. Any notice required or permitted hereunder shall be given in
writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or three business days after deposit in the United
States Postal Service, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days advance written notice to each of the other parties hereto.
COMPANY: Kideo Productions, Inc.
611 Broadway, Suite 523
New York, New York 10012
Telecopier No. (212) 505-2142
with a copy to:
Solovay Marshall & Edlin, P.C.
845 Third Avenue
New York, New York 10022
Telecopier No. (212) 355-4608
PURCHASER: At the address set forth on the signature page of the Agreement.
ESCROW AGENT: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Telecopier No. (212) 213-2077
12. By signing these Joint Escrow Instructions, the Escrow Agent
becomes a party hereto only for the purpose of these Joint Escrow Instructions;
the Escrow Agent does not become a party to the Agreement. The Company and the
Purchaser have become parties hereto by their execution and delivery of the
Agreement, as provided therein.
13. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns and
shall be governed by the laws of the State of New York without giving effect to
principles governing the conflicts of laws. A facsimile transmission of these
instructions signed by the Escrow Agent shall be legal and binding on all
parties hereto.
14. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings provided in the Agreement.
ACCEPTED BY ESCROW AGENT: KIDEO PRODUCTIONS, INC.
KRIEGER & PRAGER
By: By:
----------------------------- -------------------------------
ROBERT J. RISCICA