JOINT ESCROW INSTRUCTIONS
July 15, 2005
Xxxx Xxxxxxxxx
Dear Mr. Xxxxxxxxx:
Reference is hereby made to that certain Securities Purchase Agreement of
even date herewith (the "Agreement") between Stronghold Technologies, Inc., a
Nevada corporation (the "Company") and the Buyers named therein (each, a
"Buyer"). Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings provided in the Agreement.
As escrow agent for both the Company and each of the Buyers, you
(hereafter, the "Escrow Agent") are hereby authorized and directed to hold an
amount equal to $567,500.00 (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. (a) The Escrow Agent shall, as promptly as practicable, notify the
Company or its attorneys orally of receipt of the Escrow Funds from the Buyers.
The Escrow Agent shall release, as contemplated below, the relevant Escrow Funds
to or upon the order of the Company.
(b) On the 1st day of each month following the Closing Date, the
Escrow Agent shall release to the Company, upon the written order of the Company
and the Buyers, which shall be faxed to the Escrow Agent, an amount equal to
$100,000; except that on the 6th month following the Closing Date, the Escrow
Agent shall release to the Company the balance of the Escrow Funds.; and
(c) The Escrow Agent shall deposit all funds received hereunder in
the Escrow Agent's escrow account at such bank at which the Escrow Agent then
maintains its escrow account; the interest earned on such account shall be
deemed the property of the Company.
2. In consideration for providing the fees set forth in Section 1, the
Escrow Agent will be entitled to a fee of $600. The Escrow Agent shall also be
entitled to be reimbursed for any expenses (such as wire fees) incurred as a
result of the disbursements.
3. The Escrow Agent's duties hereunder may be altered, amended, modified
or revoked only by a writing signed by the party to be charged therewith.
4. 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.
5. 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.
6. 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.
7. The Escrow Agent shall be entitled to employ such legal counsel and
other experts as the Escrow Agent may deem necessary to advise the Escrow Agent
properly 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 Buyers and/or the
Finder and/or their respective affiliates, and may continue to act as legal
counsel for any one or more of such parties, 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 a Buyer or the Finder and
waives any claim that such representation represents a conflict of interest on
the part of the Escrow Agent. The Company and each Buyer understands that the
Buyer and the Escrow Agent are relying explicitly on the foregoing provision in
entering into these Joint Escrow Instructions.
8. 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. In the event of any such resignation, the Buyer and the Company shall
appoint a successor Xxxxxx Agent.
9. If the Escrow Agent reasonably requires other or further instruments in
connection with these escrow instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
10. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of 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.
11. 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.
12. 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.
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. The parties hereto hereby waive a trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other in respect of any matter arising out of or in connection with these Joint
Escrow Instructions.
15. The rights and obligations of any party hereto are not assignable
without the written consent of the other parties hereto. These instructions
constitute the entire agreement amongst the parties with respect to the subject
matter hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE TO ESCROW AGREEMENT DATED JULY 15, 2005]
STRONGHOLD TECHNOLOGIES, INC.
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Xxxxxxxxxxx X. Xxxxx
President and Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
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Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
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Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
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Xxxxx X. Xxxxxxxx
Manager
NEW MILLENNIUM CAPITAL PARTNERS, II, LLC
By: First Street Manager II, LLC
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Xxxxx X. Xxxxxxxx
Manager
ACCEPTED BY ESCROW AGENT:
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Xxxx Xxxxxxxxx
