ESCROW AGREEMENT
ESCROW AGREEMENT ("Escrow Agreement') dated as of _____________ by and among
XXXXX XXXXXXXX ENTERTAINMENT, INC. , a Colorado corporation, with a
principal place of business at 0000 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxx,
Xxxxxxxxxx 00000, ("JNE"), and Y.L. Xxxxxx, having an address at ___________
and XXXXXX X. XXXXXXXX, ESQ., having a principal place of business
at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Escrow Agent").
WHEREAS:
A. Purchaser and JNE entered into a Securities Subscription
Agreement dated as of ________________ ("Agreement"), in which, inter alia,
Purchaser agreed to purchase JNE's 3 % Series A Convertible
Debentures ("Debentures");
B. Pursuant to the Agreement, the Debentures are to be delivered
to the Escrow Agent to hold and administer in accordance with the terms and
conditions of this Escrow Agreement.
NOW THEREFORE, in consideration of the respective premises, mutual covenants
and agreements of the parties hereto, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Appointment of Escrow Agent. Escrow Agent is hereby appointed
as escrow agent and the Escrow Agent hereby accepts such appointment. The
Escrow Agent shall act in accordance with the instructions set forth in this
Escrow Agreement and any further instructions given to it by written
instrument signed by JNE and Purchaser.
2. Issuance and Delivery of the Debentures and Payment by the
Purchaser to the Escrow Agent.
On the date hereof, JNE shall issue in the name of the Purchaser and deposit
with the Escrow Agent the Debentures in the face amount of $___________ as
provided in the Agreement, and the Purchaser shall deposit with the Escrow
Agent the sum of $__________. Upon receipt of the Debentures from JNE, Escrow
Agent shall immediately wire the funds to JNE, to an account designated
in writing by JNE, in the sum of $___________ representing the Purchase
Price of thev Debentures, provided that JNE has delivered to
Portfolio investment Strategies Corp. ("PISC") the fee, as
defined in a certain Compensation Agreement between JNE and
PISC dated July 30, 1998.
3. Custody and Disposition of the Debentures. The Escrow Agent shall
hold and dispose of the Debentures only in accordance with
the terms of this Escrow Agreement.
4. Conversion of Debentures.
(a) As Provided in paragraph 4 of the Debentures, Purchaser may
give Notice of Conversion of the Debentures to JNE and Escrow Agent by
facsimile to the number set forth in Section 10 below. Conversion of
Debentures may take place at any time Until the Maturity Date of the
Debentures, as defined in the Debentures. As provided in paragraph 4 of the
Debentures, within 10 business days of receipt of the Notice of Conversion,
JNE shall deliver to the Purchaser, or to an account designated by Purchaser
in the Notice of Conversion, certificates representing the shares of common
stock to which the Purchaser shall be entitled by reason of the conversion
("Certificates").
(b) If JNE fails to timely deliver Certificates, as provided in
Section 5(a) above, then JNE shall pay Purchaser $150 per day
for each day late in delivering Certificates
up to and including the 10th late day and $500 per day for each day late
in delivering the Certificates after the 11th th day late
through the 70th day late ("Liquidated Damages"). Any Liquidated
Damages incurred by JNE shall be payable immediately and in cash
upon demand in writing by Purchaser, or its agent, to JNE.
However, such Liquidated Damages may be paid pursuant to
the Resolution, as defined below, by issuing shares of
stock to the Escrow Agent upon instruction issued by the
Escrow Agent to Transfer Agent as defined below.
Notwithstanding anything contained in the Agreement
to the contrary, Purchaser shall be required to pay the Liquidated
Damages set forth in this Section 5(c).
(C) Upon conversion of the entire principal face amount of the
Debentures into Certificates, or upon redemption of the Debentures by JNE,
as provided in Section 4(C) of the Debentures, the original Debentures held
by the Escrow Agent pursuant to this Escrow Agreement shall be surrender and
delivered to JNE, and NONE OF the parties shall have any further obligations
to the other.
5. Issuance and Delivery of the Resolution to Escrow Agent.
On the date hereof, JNE shall deliver to the Escrow Agent a resolution in
the form annexed hereto as Exhibit it ("Resolution"), instructing JNE's
transfer agent American Securities Transfer, Inc., 000 Xxxxx Xxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxx 00000, ("Transfer Agent") to issue to Purchaser
shares of JNE's common stock registered in the name of the Purchaser,
without restrictive legend as provided in Section 5(b) of the Agreement, and
to satisfy any Liquidated Damages which are required to be paid by JNE
pursuant to Section 4(b) of this Escrow Agreement, in an amount equal up to
$___________, or at some lesser amount as the Escrow Agent, in his sole
discretion may direct the Transfer Agent, at a share price which is
calculated in accordance with Section 4(a) of the Debenture
with respect to the Conversion, Shams (as defined therein), Section 4(b) of
the Debenture with respect to Interest Shares (as defined therein) and
shares issued as Liquidated Damages pursuant to Section 4(b) hereof, and
providing that JNE shall not change its transfer agent from the Transfer
Agent, without the express written consent and directive of the Escrow Agent
6. Bankruptcy. In the event any proceeding under the Bankruptcy
Laws of the United States or any proceedings under any state laws for the
protection of debtors or creditors, are filed, voluntarily or involuntarily,
by or on behalf of JNE, then JNE shall be required to honor any Notices of
Conversion given by Purchaser either before or after bankruptcy.
7. Indemnification. Purchaser and JNE agree, jointly and
severally to indemnify, defend and hold harmless the Escrow Agent from and
against any and all costs (including, without limitation, legal fees and
expenses), liabilities, claims and losses arising out of or in connection
with this Escrow Agreement or any action or failure to act by the Escrow
Agent under this Escrow Agreement, except as provided in paragraph 8 below.
8. Concerning the Escrow A . To induce the Escrow Agent to act
hereunder, it is further agreed by the undersigned that:
(a) This Escrow Agreement expressly sets forth all the duties of
the Escrow Agent with respect to any and all matters pertinent hereto- No
implied duties or obligations shall on the part of the Escrow Agent shall be
read into this Escrow Agreement. The Escrow Agent shall not BE BOUND BY THE
provisions of any agreement among the other parties hereto except this
Escrow Agreement.
(b) The Escrow Agent shall not be liable for any action or
failure to act in its capacity as Escrow Agent hereunder unless such action
or failure to act shall constitute willful misconduct on the part of the
Escrow Agent, in which case there shall be no indemnification obligations.
(c) The Escrow Agent shall be entitled to rely upon any order,
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 of the service thereof. The Escrow Agent may act in reliance
upon any instrument or signature believed by it to be genuine and may
assume, unless he has actual knowledge to the contrary, that any person
purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
(d) The Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Escrow Agreement and shall not
be, liable for any action taken or omitted in accordance with such advice,
except as provided in paragraph 8(b) above.
(e) The Escrow Agent does not have any interest in the Debentures,
Conversion Shares or any other property deposited hereunder but is serving
as escrow holder only and having only possession thereof, and is not
charged with any duty or responsibility to determine the
validity or enforceability of any such documents.
(f) The Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by delivering the Debentures to any successor Escrow
Agent, jointly designated by the other parties hereto in writing, or to any
court of competent jurisdiction, whereupon the Escrow Agent shall be
discharged of and from ANY AND ALL FURTHER obligations arising in connection
with this Escrow Agreement thereafter. The resignation of the Escrow Agent
will take effect on the earlier of (a) the appointment of a successor
(including a court of competent jurisdiction) or (b) the day which is 30
days after the date of delivery of its written notice of resignation to the
other parties hereto- If at that time the Escrow Agent has not received a
designation of a successor Escrow Agent, the Escrow Agent's sole
responsibility after that time SHALL be to safekeep the Debentures AND NOT
make delivery or disposition thereof until receipt of a designation of
successor Escrow Agent or a joint written disposition instruction by the
other parties hereto or a final order of a court of competent jurisdiction.
(g) In the event of any disagreement among the parties hereto
resulting in adverse claims or demands being made in connection with the
Debentures, or in the event that the Escrow Agent otherwise determines that
the Debentures should be retained, then the Escrow Agent may retain the
Debentures until the Escrow Agent shall have received (i) a final
nonappealable order of a court of competent jurisdiction directing delivery
of the Debentures, or (ii) a written agreement executed by the other parties
hereto directing delivery of the Debentures, in which case the Escrow Agent
shall promptly deliver the Debentures in accordance with such order or
agreement. Any court order referred to in (i) above shall be accompanied by
a legal opinion by counsel for the presenting party reasonably satisfactory
to the Escrow Agent to the effect that said court order is final and
nonappealable. The Escrow Agent shall act on such court order and legal
opinion without further question.
(h) This Escrow Agreement shall be binding upon and inure solely
to the benefit of the parties hereto an their respective successors
(including successors by way of merger) and assigns, heirs, administrators;
and representatives and shall not be enforceable by or inure to the benefit
of any third party except as provided in paragraph (g) with respect to a
resignation by the Escrow Agent.
(i) This Escrow Agreement may 'be modified by a writing signed by
all the parties hereto, and no waiver hereunder shall be effective unless in
a writing signed by the party to be charged.
9. Governing Law. This Escrow Agreement shall be governed in all
respects by the internal laws of the State of New York. The parties agree to
submit to the
jurisdiction and venue of any state or federal court in New York City having
subject matter jurisdiction over the matter. Service may be made by
certified mail, return receipt requested, to the parties at the addresses
set forth in paragraph 10 below, but the parties shall not be precluded from
making service in any other manner permitted by law.
10. All notices (except Notices of Conversion which shall be governed by
Section 4(a) above), requests, consents and other communications hereunder
shall be in writing, shall be delivered by hand or sent by U.S. Express
Mail, Fedex or some other reliable overnight courier service for next day
delivery. Each such notice or other communication shall for all purposes of
this Escrow Agreement be treated as effective or having been given when
delivered if delivered personally, or, if sent by overnight express mail
service, 1 day after the same has been deposited with the U.S. Postal
Service, Fedex or the overnight courier, All such notices must also be sent
by facsimile on the same day to the parties as follows:
If to JNE:
Xxxxx Xxxxxxxx Entertainment, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, President
Fax: 000-000-0000
with a copy to:
Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: M. Xxxxxxx Xxxxxx
Fax: 000-000-0000
If to Purchaser:
________________
________________
________________
________________
with a copy to:
Portfolio investment Strategies Corp.
0 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxx Xxxx 00000
Fax: 000-000-0000
If to Escrow Agent:
Xxxxxx X. Xxxxxxxx, Esq.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
11. Counterparts. This Escrow Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument
12. Fees of Escrow Agent. In consideration of the performance of this Escrow
Agreement, Purchaser shall pay the Escrow Agent a fee of $______ ("Fee").
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be duly executed and delivered, as of the day and year first
above written.
XXXXX XXXXXXXX ENTERTAINMENT, INC.
BY:/s/Xxxxxx Xxxxxxxx
President
PURCHASER:
By:_________________
ESCROW AGENT:
By:/s/Xxxxxx X. Xxxxxxxx, Esq.
