EXHIBIT 2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "ESCROW AGREEMENT") is made and entered into
as of this 22nd day of March, 2002, by and among XXXXXXXX X. XXXXX, an
individual ("PURCHASER"), SUMMIT BROKERAGE SERVICES, INC. ("SELLER"), XXXXXXXXXX
XXXXXXXX LLP, a Georgia limited liability partnership ("FUNDS ESCROW AGENT") and
XXXXXXXXX XXXXXXX, P.A., a Florida professional association ("SHARES ESCROW
AGENT"). Shares Escrow Agent and Funds Escrow Agent are sometimes collectively
referred to herein as the "Escrow Agent".
RECITALS:
WHEREAS, Purchaser and Seller entered into that certain Stock Purchase
Agreement dated as of March 22, 2002 (the "PURCHASE AGREEMENT"), pursuant to
which Purchaser agreed to acquire, subject to the conditions described below,
(i) One Million (1,000,000) shares of Seller's common stock, $.0001 par value,
from Xxxxxxx Xxxxxx in exchange for One Hundred Thousand Dollars ($100,000) and
(ii) Four Million (4,000,000) shares, $.0001 par value, of the Seller (the
"ESCROWED SHARES") from the Seller in exchange for Four Hundred Thousand Dollars
($400,000) (the "ESCROWED FUNDS") and ;
WHEREAS, the Purchase Agreement provides that the consummation of the
transactions described therein is conditioned upon receipt by Purchaser of the
consent of First Union Securities Financial Network, Inc. and the approval of
the National Association of Securities Dealers by May 21, 2002.
WHEREAS, pursuant to Section 3(a) of the Purchase Agreement, Purchaser
agreed to deliver to Funds Escrow Agent the Escrowed Funds to be administered in
accordance with the terms and conditions of this Escrow Agreement; and
WHEREAS, pursuant to Section 3(b) of the Purchase Agreement, Seller
agreed to deliver to Shares Escrow Agent the Escrowed Shares to be administered
in accordance with the terms and conditions of this Escrow Agreement;
NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth and contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. APPOINTMENT OF ESCROW AGENTS.
(a) Each of Purchaser and Seller hereby designates and
appoints Xxxxxxxxxx Xxxxxxxx LLP, a Georgia limited liability partnership, as
Funds Escrow Agent for the purposes set forth herein, and Funds Escrow Agent
hereby accepts such appointment. Funds Escrow Agent agrees to receive the
deposit of the Escrowed Funds to hold and administer the same in accordance with
the terms of this Escrow Agreement in the manner so provided for herein. Each of
Purchaser and Seller hereby acknowledges that Xxxxxxxxxx Xxxxxxxx LLP has served
as counsel to Purchaser in connection with the
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Purchase Agreement and this Escrow Agreement and hereby waives any conflict that
may arise from such firm's continuing service as such counsel and as Funds
Escrow Agent hereunder.
(b) Each of Purchaser and Seller hereby designates and
appoints Xxxxxxxxx Taurig, P.A., a Florida corporation, as Shares Escrow Agent
for the purposes set forth herein, and Shares Escrow Agent hereby accepts such
appointment. Shares Escrow Agent agrees to receive the deposit of the Escrowed
Shares to hold and administer the same in accordance with the terms of this
Escrow Agreement in the manner so provided for herein. Each of Purchaser and
Seller hereby acknowledges that Xxxxxxxxx Taurig, P.A. has served as counsel to
Seller in connection with the Purchase Agreement and this Escrow Agreement and
hereby waives any conflict that may arise from such firm's continuing service as
such counsel and as Shares Escrow Agent hereunder.
2. DEPOSIT OF THE ESCROWED PROPERTY WITH ESCROW AGENTS.
(a) Upon the execution hereof, Purchaser will deliver the
Escrowed Funds to Funds Escrow Agent in accordance with Section 3(a) of the
Purchase Agreement, and Funds Escrow Agent shall acknowledge receipt of the
Escrowed Funds when received.
(b) Upon the execution hereof, Seller will deliver
certificates representing the Escrowed Shares, filled out in the name of
Purchaser, to Shares Escrow Agent in accordance with Section 3(b) of the
Purchase Agreement, and Shares Escrow Agent shall acknowledge receipt of the
Escrowed Shares when received.
3. INVESTMENT OF FUNDS IN ESCROW. Funds Escrow Agent shall hold
and disburse the Escrowed Funds under the terms of this Escrow Agreement and
shall from time to time invest and reinvest any cash assets held in escrow in
the cash investment account of Funds Escrow Agent. Any and all income and
interest realized from the investments of any Escrowed Funds made by Funds
Escrow Agent pursuant hereto shall be added to, and become part of, the Escrowed
Funds.
4. DISBURSEMENT OF THE ESCROWED PROPERTY.
(a) Funds Escrow Agent shall distribute the Escrowed
Funds to: (i) Seller, upon receipt of written notice from Seller and Purchaser
on or prior to May 21, 2002, notifying Funds Escrow Agent that the closing of
the purchase of the Escrowed Shares (the "CLOSING") has occurred, and directing
Funds Escrow Agent to distribute the Escrowed Funds to Seller; (ii) Purchaser,
upon receipt of written notice from Purchaser notifying Funds Escrow Agent that
Purchaser does not intend to purchase the Escrowed Shares in exchange for the
Escrowed Funds and directing Funds Escrow Agent to distribute the Escrowed Funds
to Purchaser; and (iii) Purchaser, if the Closing has not occurred by May 21,
2002.
(b) Shares Escrow Agent shall distribute the Escrowed
Shares to: (i) Purchaser, upon receipt of a written notice from Purchaser and
Seller on or prior to May 21, 2002, notifying Shares Escrow Agent that the
Closing has occurred and directing the Shares Escrow Agent to distribute the
Escrowed Shares to Purchaser; (ii) Seller, upon receipt of written notice from
Purchaser notifying Shares Escrow Agent that Purchaser does not intend to
purchase the Escrowed Shares in exchange for the Escrowed Funds; and (iii)
Seller, if the Closing has not occurred by May 21, 2002. The parties hereto
hereby acknowledge and agree that the Escrowed Shares shall be deemed issued and
outstanding upon delivery thereof by the Shares Escrow Agent to Purchaser in
accordance with this
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SUBSECTION (B), and that such shares shall not be deemed issued and outstanding
unless and until such event transpires.
5. TERM. This Escrow Agreement shall terminate when all Escrowed
Funds and Escrowed Shares have been distributed by the respective Escrow Agent
in accordance herewith or all of the Escrowed Funds and Escrowed Shares have
been subjected to interpleader pursuant to SECTION 6(F) of this Escrow
Agreement.
6. DUTIES OF THE ESCROW AGENT.
(a) The duties and responsibilities of Escrow Agent
hereunder shall be limited to those expressly set forth in this Escrow
Agreement, and Escrow Agent shall not be bound in any way by any other contract
or agreement between Purchaser or Seller, whether or not Escrow Agent has
knowledge of any such contract or agreement or terms or conditions thereof
except for the applicable sections of the Purchase Agreement specifically
referenced in this Escrow Agreement.
(b) Escrow Agent shall not be liable to anyone for any
damages, losses, or expenses incurred as a result of any act or omission of
Escrow Agent, unless such damages, losses, or expenses are caused by Escrow
Agent's willful misconduct or gross negligence. Accordingly, Escrow Agent shall
not incur any such liability with respect to: (i) any action taken or omitted in
reliance upon any instrument, including any written notice or instruction
provided for herein, not only as to its due execution by an authorized person
and as to the validity and effectiveness of such instrument, but also as to the
truth and accuracy of any information contained therein that Escrow Agent shall
in good faith believe to be genuine, to have been signed by a proper person or
persons, and to conform to the provisions of this Escrow Agreement; and (ii) any
action taken or omitted in reliance upon the advice of counsel (which may be of
Escrow Agent's own choosing).
(c) Purchaser and Seller hereby jointly and severally
agree to indemnify and hold harmless Escrow Agent to the fullest extent
permitted by law from and against any and all losses, claims, damages, expenses
(including reasonable fees and disbursements of counsel), actions, proceedings,
or investigations (whether formal or informal), or threats thereof (all of the
foregoing being hereinafter referred to as "ESCROW AGENT LIABILITIES"), based
upon, relating to, or arising out of, the provision of services hereunder;
provided, however, that no party hereunder shall be liable under this SECTION
6(C) for any amount paid in settlement of claims without their consent, which
consent shall not be unreasonably withheld, or to the extent that a court of
competent jurisdiction finally judicially determines that such Escrow Agent
Liabilities resulted from the willful misconduct or gross negligence of the
applicable Escrow Agent.
(d) If a dispute between any of the parties hereto
sufficient to justify its doing so shall occur, Escrow Agent shall be entitled
to tender the Escrowed Funds and/or the Escrowed Shares into the registry or
custody of any court of competent jurisdiction, to initiate such legal
proceedings as appropriate, and thereupon to be discharged from all further
duties and liabilities under this Escrow Agreement. The filing of any such legal
proceedings shall not deprive Escrow Agent of any compensation earned prior to
such filing and the provisions of SECTION 6(C) hereof shall survive such
discharge.
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(e) If all or any part of the Escrowed Funds or the
Escrowed Shares shall be attached, garnished, or levied upon pursuant to any
court order, or the delivery thereof shall be stayed or enjoined by a court
order, or any other order, judgment, or decree shall be made or entered by any
court affecting the Escrowed Funds or the Escrowed Shares, or any part thereof,
or any act of Escrow Agent, Escrow Agent is hereby expressly authorized to obey
and comply with all final writs, orders, judgments, or decrees so entered or
issued by any court, without the necessity of inquiring whether such court has
jurisdiction, and if Escrow Agent obeys or complies with any such writ, order,
judgment, or decree, it shall not be liable to any of the parties hereto or to
any other person by reason of such compliance.
(f) Escrow Agent may resign at any time by notifying the
other parties hereto in accordance with SECTION 8 below. From the date upon
which such notice is received by Purchaser and Seller until the earlier of: (i)
the acceptance by a successor escrow agent as shall be appointed (A) by an
agreement of such parties, or (B) if the parties are unable to agree within
twenty (20) days following the last party to receive such notice, by the senior
active Judge of the United States District Court for the Northern District of
Georgia upon application by Purchaser and Seller; and (ii) thirty (30) days
following the date upon which notice was mailed, Escrow Agent shall have the
right to tender into the registry or custody of any court of competent
jurisdiction any part or all of the Escrowed Funds or the Escrowed Shares, as
applicable, whereupon its duties hereunder shall cease.
7. COMPENSATION OF ESCROW AGENT. Escrow Agent shall receive no
compensation for services performed hereunder.
8. NOTICES. All notices, demands or other communications required
or permitted to be given or made hereunder shall be in writing and delivered
personally or sent by pre-paid, first class, certified or registered mail,
return receipt requested, or overnight mail to the intended recipient thereof at
its address set out below, together with, but only if reasonably practicable, a
copy via facsimile to the intended recipient thereof at his, her or its
facsimile number set out below. Any such invoice, demand or communication shall
be deemed to have been duly given upon receipt (if given or made in person). In
proving the same, it shall be sufficient to show that the envelope was duly
addressed, stamped and posted and delivered, and whether or not delivery was
accepted. The addresses of the parties for purposes of this Escrow Agreement
are:
(i) If to Purchaser: Xxxxxxxx X. Xxxxx
0000 Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Facsimile No.: (000) 000-0000
(ii) If to Seller: Summit Brokerage Services, Inc.
00 Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
Facsimile No.: (000) 000-0000
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(iii) If to Funds Escrow Agent: Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: W. Xxxxx Xxxxx, Esq.
Facsimile No.:
(000) 000-0000
(iv) If to Shares Escrow Agent: Xxxxxxxxx Traurig, P.A.
000 X. Xxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Facsimile No.:
(000) 000-0000
Any party may change the address or facsimile number to which notices or other
communications to such party shall be delivered or mailed by giving written
notice thereof to the other parties hereto in the manner provided herein.
9. COUNTERPARTS. This Escrow Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
10. GOVERNING LAW. This Escrow Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Georgia
(without regard to its conflicts of law rules).
11. PARTIAL INVALIDITY; SEVERABILITY. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Escrow Agreement legal, valid and
enforceable. If any term of this Escrow Agreement, or part thereof, not
essential to the commercial purpose of this Agreement shall be held to be
illegal, invalid or unenforceable by a forum of competent jurisdiction, it is
the intention of the parties that the remaining terms hereof, or part thereof,
shall constitute their agreement with respect to the subject matter hereof and
all such remaining terms, or parts thereof, shall remain in full force and
effect. To the extent legally permissible, any illegal, invalid or unenforceable
provision of this Escrow Agreement shall be replaced by a valid provision which
will implement the commercial purpose of the illegal, invalid or unenforceable
provision.
12. ENTIRE AGREEMENT; BINDING EFFECT. This Escrow Agreement
contains the sole and entire agreement among the parties hereto with respect to
the subject matter hereof and shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
13. MODIFICATION. Subject to SECTION 6(F) above, this Escrow
Agreement may not be revoked, rescinded, amended, or terminated except upon the
mutual written consent of all of the parties hereto.
14. WAIVER. Any term or condition of this Escrow Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but
only if such waiver is evidenced by a writing signed by such party and delivered
to all other parties hereto. No failure on the part of any party hereto to
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exercise, and no delay in exercising, any right, power, or remedy created
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or remedy by any such party preclude any other or
further exercise thereof or the exercise of any other right, power, or remedy.
No waiver by any party hereto of any breach of or default in any term or
condition of this Escrow Agreement shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or condition
hereof.
15. EFFECT OF CAPTIONS AND HEADINGS. The captions and headings
contained herein are for convenience only, do not constitute a part of this
Escrow Agreement, and shall not be used in construing it.
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IN WITNESS WHEREOF, this Escrow Agreement has been executed by the
parties hereto as of the day and year first above written.
PURCHASER:
XXXXXXXX X. XXXXX
/s/ Xxxxxxxx X. Xxxxx
-----------------------------------
SELLER:
SUMMIT BROKERAGE SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
--------------------------
Its: CEO
----------------------------
FUNDS ESCROW AGENT:
XXXXXXXXXX XXXXXXXX LLP
By: /s/ W. Xxxxx Xxxxx
--------------------------------
W. Xxxxx Xxxxx, a partner
SHARES ESCROW AGENT:
XXXXXXXXX TRAURIG, P.A.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx, a shareholder
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