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Exhibit 4.3
ANNEX II
TO
SECURITIES PURCHASE AGREEMENT
JOINT ESCROW INSTRUCTIONS
Dated as of the date of the
Securities Purchase Agreement to
Which These Joint Escrow
Instructions Are Attached
Xxxxxxx & Xxxxxx, Esqs.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Dear Xx. Xxxxxxx:
As escrow agent for both American Champion Entertainment, Inc., a
Delaware corporation (the "Company"), and the Buyer (the "Buyer") of 7%
Convertible Debentures (the "Debentures") of the Company, who is named in
the Securities Purchase Agreement between the Company and the Buyer 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 with respect to the Initial
Debentures and of the Purchase Price of the Additional Debentures from or
on behalf of the Buyer and notify the Buyer of receipt of the relevant
Debentures for each tranche contemplated by the Agreement. As promptly as
feasible upon receipt of notice (whether oral or in written form) from the
Company and the Buyer that the respective conditions precedent to the
relevant 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 relevant Escrow Funds to or upon the order of the Company, and
shall release the relevant Debentures to the Buyer. After receipt of such
notice, an amount equal to (i) seven percent (7 %) of the Purchase Price
of each tranche of the Debentures as the aggregate cash fees due to XX
Xxxxxxx Securities, Inc. (the "Placement Agent") shall be released to or
upon the order of the Placement Agent and (ii) $10,000 out of the Purchase
Price for the Initial Debenture and $5,000 out of the Purchase Price for
the First Additional Tranche in legal and escrow fees to the Escrow Agent
shall be released to or upon the order of the Escrow Agent. If the
relevant Debentures are 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 relevant Purchase Price funds from the Buyer, the Escrow
Agent shall notify the Buyer and the Buyer shall be entitled to cancel the
purchase and demand repayment of the funds. If such funds are not
deposited with the Escrow Agent within ten (10) days after receipt by the
Buyer of notice of receipt by the Escrow Agent of the relevant Debentures
from the Company, the Escrow Agent shall notify the Company and the
Company shall be entitled to cancel the purchase and demand return of such
Debentures. If the Company or the Buyer notifies the Escrow Agent that on
any Closing Date the conditions precedent to the obligations of the
Company or the Buyer, as the case may be, under the Agreement were not
satisfied or waived, then the Escrow Agent shall return the relevant
Escrow Funds to the Buyer and shall return the relevant Debentures to the
Company. Prior to return of any Escrow Funds to the Buyer, the Buyer
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.
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2. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, the Buyer 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 the Escrow Agent while acting in good faith, 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.
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 the Buyer, and may continue to act as legal counsel for
such party, from time to time, notwithstanding its duties as the Escrow
Agent hereunder. The Company consents to the Escrow Agent acting in such
capacity as legal counsel for the Buyer and waives any claim that such
representation represents a conflict of interest on the part of the Escrow
Agent. The Company understands that the Buyer and the Escrow Agent are
relying explicitly on the foregoing provision in entering into these Joint
Escrow Instructions.
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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 Buyer at least ten (10) days prior to the effective date
of such resignation. In the event of any such resignation, the Buyer 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 the 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 the 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 Buyer 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 (a) have
been tax obligations in connection with Escrow Agent's fee hereunder, or
(b) have been determined by final, unappealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Escrow Agent, or (c) be a liability, or arise
from liability, to either the Company or the Buyer.
11. Any notice required or permitted hereunder shall be given in
manner provided in the Section headed "NOTICES" in the Agreement, the
terms of which are incorporated herein by reference.
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 Buyer have become parties hereto by their execution
and delivery of the Agreement, as provided therein.
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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.
15. The rights and obligations of any party hereto are not
assignable without the written consent of the other parties hereto. These
Joint Escrow Instructions constitute the entire agreement amongst the
parties with respect to the subject matter hereof.
16. The Company agrees that the Placement Agent is a third party
beneficiary of the provisions of clause (i) in Section 1 hereof and that
such clause can not be amended or revoked without the prior written
consent of the Placement Agent.
ACCEPTED BY ESCROW AGENT:
XXXXXXX & XXXXXX
By: _______________________________________
Date: _____________________________________
