EXHIBIT 2.3
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is made and entered into as of the
day of March, 2000, by and among ACCENT ACQUISITIONS I, CO., a Georgia
corporation ("Buyer") and PARADIGM MORTGAGE ASSOCIATES, INC. ("Paradigm") and
▇▇▇▇▇ ▇▇▇▇ LLP ("Escrow Agent").
WITNESSETH:
WHEREAS, Paradigm Mortgage Associates, Inc. ("Paradigm"), the principal
shareholders of Paradigm (the "Shareholders") and Buyer have entered into an
Asset Purchase Agreement dated as of the date hereof (the "Purchase Agreement")
relating to the purchase by Buyer of certain assets utilized by Paradigm in
connection with its mortgage lending business;
WHEREAS, pursuant to Section 8.01 of the Purchase Agreement, Paradigm is
required to deposit into escrow 400,000 shares of common stock of Lahaina
Acquisitions, Inc., Buyer's parent company ("Lahaina") (the "Escrowed Shares"),
which amount shall be available to satisfy claims by Buyer for indemnification
against Paradigm and the Shareholders pursuant to Section 8.01 of the Purchase
Agreement and for the failure of the branch offices of Paradigm purchased by
Buyer to satisfy certain performance criteria;
WHEREAS, the parties hereto wish to specify the terms and conditions for
the release of the Escrowed Shares.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings ascribed below:
(a) "Escrow Funds" shall mean any cash dividends paid on Escrow Shares
held in escrow hereunder and any funds received for the sale of the Escrow
Shares as provided in Section 6(c) hereof.
(b) "Escrow Shares" shall mean (i) 400,000 shares of common stock of
Lahaina deposited in escrow as provided in Section 2 together with all
rights associated with such shares, plus all shares or other securities or
property (other than cash) paid as a dividend on or issued or distributed
in respect of such deposited shares, and any shares or other securities
into which such deposited shares may be changed or for which they may be
exchanged pursuant to any stock split, dividend, combination,
reclassification or other corporate action of Lahaina affecting shares of
common stock of Lahaina generally and (ii) the Escrow Funds.
(c) "Indemnity Obligations" shall mean the indemnity obligations of
Paradigm and the Shareholders as set forth in Section 8.01(a) of the
Purchase Agreement.
(d) "Performance Obligations" shall mean the performance criteria
established by Buyer for the branch offices of Paradigm purchased by Buyer
as set forth in Section 8.01(b) of the Purchase Agreement.
(e) "Transition Obligations" shall mean the obligation of Paradigm and
the Shareholders to pay for certain transition costs associated with
integrating, assimilating and consolidating the assets purchased by the
Buyer within its business operations as set forth in Section 8.01(c) of the
Purchase Agreement.
(f) "Share Value" shall mean the average closing price of shares of
common stock of Lahaina as quoted on the OTC Bulletin Board for the
previous ten (10) consecutive trading days.
2. Deposit of Escrow Shares. Concurrently with the execution of this
Agreement, Paradigm has deposited in escrow with the Escrow Agent the Escrow
Shares together with appropriate stock powers with signatures guaranteed, the
receipt of which is hereby acknowledged by the Escrow Agent. The Escrow Agent
agrees to hold and release the Escrow Shares pursuant to the terms and
conditions of this Agreement. The parties hereby agree that 250,000 shares of
the Escrow Shares shall be segregated to pay for Indemnity Obligations and
Performance Obligations, and the remaining 150,000 shares of the Escrow Shares
shall be segregated to pay for Transition Obligations. At the end of the first
year of this Agreement, the Escrow Agent shall retain only 150,000 shares in
escrow and shall release from escrow that amount of shares which exceeds 150,000
shares. The parties hereby acknowledge and agree that any shares remaining in
escrow after the first year of this Agreement shall only be used to satisfy
Indemnity Obligations.
3. Term. The term of this Agreement shall be for a period of two (2) years
commencing upon the date of the execution of this Agreement.
4. Release of Escrow Shares.
(a) Notice of Indemnification Claim, Performance Claim or
Reimbursement of Transition Costs. In the event of a claim by Buyer which
is subject to indemnification pursuant to Section 8.01(a) of the Purchase
Agreement, a claim by Buyer under the performance guarantee pursuant to
Section 8.01(b) of the Purchase Agreement or a claim by Buyer for the
reimbursement of transition costs pursuant to Section 8.01(c) of the
Purchase Agreement, Buyer may, from time to time, give notice ("Buyer's
Notice") to the Escrow Agent that Buyer is entitled to receive all or any
portion of the Escrow Shares and/or Escrow Funds and shall simultaneously
give a copy of the Buyer's Notice to Paradigm. The Buyer's Notice shall
state the basis of Buyer's claim and (to the extent reasonably
determinable) the amount thereof. If the Buyer's Notice is given on or
before the first anniversary of this Agreement for Performance Obligations
and Transition Obligations and on or before the expiration of this
Agreement for Indemnity Obligations and the Escrow Agent does not receive,
within ten (10) business days after the Buyer's Notice was provided to
Paradigm, a notice from Paradigm ("Paradigm's Notice") stating that a
dispute ("Escrow Dispute") exists relating to the Buyer's Notice and the
reasons therefor, the Escrow Agent shall immediately upon the expiration of
such ten (10)
business day period deliver to Buyer Escrow Shares with a Share Value as of
the date of the Buyer's Notice equal to the amount stated in the Buyer's
Notice. Notwithstanding the foregoing, Buyer and Paradigm acknowledge and
agree that Buyer may not make any claim for Performance Obligations or
Transition Obligations after the first anniversary of this Agreement.
(b) Escrow Dispute. If the Escrow Agent receives Paradigm's Notice
with such ten (10) business day period, the Escrow Agent shall notify Buyer
to that effect (the "Escrow Agent's Notice"), and the parties shall attempt
to resolve the Escrow Dispute amicably with a period of thirty (30) days
from Buyer's receipt of the Escrow Agent's Notice. If Buyer and Paradigm
are unable to resolve the Escrow Dispute within such thirty (30) day
period, the Escrow Dispute may at any time be submitted by any party hereto
to arbitration as provided in Section 4(c) below which shall be the sole
and exclusive method for resolving and remedying Escrow Disputes.
(c) Arbitration.
(i) In the event that the Escrow Dispute is not resolved by the
parties with such thirty (30) day period, either party may submit the
Escrow Dispute to arbitration by delivering to each other party
involved therein a notice of arbitration (a "Notice of Arbitration").
Such Notice of Arbitration shall specify the matters as to which
arbitration is sought, the nature of the Escrow Dispute, the claims of
each party to the arbitration and shall specify the amount, the nature
of such claims and any other matters required by the Commercial
Arbitration Rules of the American Arbitration Association in effect
from time to time to be included therein, if any.
(ii) Buyer and Paradigm each shall select one arbitrator (the
arbitrators so selected shall be referred to herein as the "Buyer's
Arbitrator" and the "Paradigm's Arbitrator," respectively). The
Buyer's Arbitrator and the Paradigm's Arbitrator shall select a third
independent, neutral arbitrator expert in the subject mater of the
dispute, and the three arbitrators so selected shall resolve the
matter according to the procedures set forth in this Section 4(c).
(iii) The arbitration shall be conducted in ______________ under
the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time, except as modified by the
agreement of all of the parties to this Agreement. The arbitrators
shall so conduct the arbitration that a final result, determination,
finding, judgment and/or award (the "Final Determination") is made or
rendered as soon as practicable, but in no event later than thirty
(30) days after the delivery of the Notice of Arbitration not later
than ten (10) calendar days following completion of the arbitration.
The Final Determination must be agreed upon and signed by the sole
arbitrator or by at least two of the three arbitrators (as the case
may be). The Final Determination shall be final and binding on all
parties and there shall be no appeal from or reexamination of the
Final Determination, except for fraud, perjury, evident partiality or
misconduct by an arbitrator prejudicing the rights of any party and to
correct manifest clerical
errors. The parties may enforce any Final Determination in any state
or federal court located in _____________. For the purpose of any
action or proceeding instituted with respect to any Final
Determination, each party hereto hereby irrevocably submits to the
jurisdiction of such courts, irrevocably consents to the service of
process by registered mail or personal service and hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it
may have or hereafter have as to personal jurisdiction, the laying of
the venue of any such action or proceeding brought in any such court
and any claim that any such action or proceeding brought in any court
has been brought in an inconvenient form.
5. Release of Escrow Shares. Within five (5) business days from the
expiration of this Agreement, the Escrow Agent shall deliver all of the
remaining Escrow Shares and Escrow Funds, if any, to Paradigm less any amounts
which are subject of a Buyer's Notice delivered prior to the expiration of this
Agreement which is being disputed by Paradigm pursuant to Section 4 of this
Agreement. Any shares which are the subject of a Buyer's Notice and held by the
Escrow Agent after the expiration of this Agreement shall be released by the
Escrow Agent in accordance with the agreement of the parties or the arbitrator's
award, as applicable.
6. Voting Rights and Distributions; Conversions of Escrow Shares.
(a) Voting Rights of Escrow Shares. All voting rights with respect to
the Escrow Shares may be exercised by Paradigm, and the Escrow Agent shall
from time to time upon written request execute and deliver to Paradigm such
proxies, consents or other documents as may be necessary to enable Paradigm
to exercise such rights.
(b) Distributions on Escrow Shares. All cash and non-cash dividends
and other distributions paid or made with respect to or on the Escrow
Shares, including, without limitation, all shares or other securities or
property paid as a dividend on or issued or distributed in respect of such
Escrow Shares, shall be received by the Escrow Agent, pending disbursement
or distribution thereof in accordance with this Agreement.
(c) Conversion of Escrow Shares. After the first anniversary of this
Agreement, the Escrow Agent shall be entitled, upon the written direction
of Paradigm, to effect the sale, for cash, of any or all of the Escrow
Shares in market transactions with unrelated third parties at market prices
reflecting arm's-length negotiation, provided that (i) all proceeds of any
such sale of Escrow Shares are held as Escrow Funds, pending disbursement
or distribution thereof in accordance with this Agreement, (ii) Paradigm
demonstrates to the satisfaction of Lahaina (or its counsel) that such sale
will be effected in compliance with all applicable federal and state
securities laws and (iii) the proceeds received from such sale of Escrow
Shares equals or exceeds $____ per share. All Escrow Funds may be invested
exclusively in short term investment grade debt securities or cash or cash
equivalents, or a Money Market Fund, or a demand deposit or time deposit
with the Escrow Agent as Paradigm shall direct in writing with respect to
the Escrow Funds and any interest or increase received in respect of any
investment will be held as Escrow Funds pending disbursement or
distribution thereof in accordance with this Agreement. The Escrow Agent in
its capacity as escrow agent hereunder shall not have any liability for any
loss sustained as a result of any investment prior to its maturity of for
the failure
of the parties to give the Escrow Agent instructions to invest or reinvest
the Escrow Fund or any earnings thereon. Except to the extent otherwise
contemplated by this Agreement, Paradigm shall, at all times, beneficially
own all Escrow Funds on deposit with the Escrow Agent. Paradigm shall not
pledge, encumber or permit the imposition of any pledge, claim, lien,
charge, encumbrance or security interest of any kind or nature on, the
Escrow Funds or any rights of the Shareholder in, to, or under the Escrow
Funds or this Agreement in any manner whatsoever.
7. Assessments on Escrow Shares and Escrow Funds. Paradigm shall be liable
for, and shall from time to time when due and payable, pay and discharge all
taxes, assessments and governmental charges, including, without limitation,
income taxes assessed on dividends and distributions on the Escrow Shares and
Escrow Funds or any sale or other disposition of any Escrow Shares, imposed on
the Escrow Shares and Escrow Funds or on any cash, securities or other property
then held in escrow hereunder or on any dividends or interest or other income
arising therefrom payable to Paradigm under this Agreement. If the Escrow Agent
is obligated to withhold any amount of any cash dividend or cash distribution or
sale proceeds, interest thereon or other amount for payment of taxes due and
payable by Paradigm, then upon five (5) business days' notice from the Escrow
Agent, Paradigm will promptly pay that amount to the Escrow Agent or deposit an
equal amount of funds in the Escrow Fund.
8. Exculpation of Escrow Agent. The Escrow Agent shall have no duties or
responsibilities except for those set forth herein (and required by applicable
law). The Escrow Agent shall have not liability whatsoever for the performance
of any duties imposed upon the Escrow Agent under this Agreement or for any
action or failure to act by the Escrow Agent hereunder. The Escrow Agent shall
not be responsible for the acts or omissions of any other parties hereto.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Escrow Agent be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including, but not limited to, lost profits), even if
the Escrow Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action. The Escrow Agent may rely and/or act upon any
instrument or document believed by the Escrow Agent in good faith to be genuine
and to be executed and delivered by the proper person or party, and may assume
in good faith the authenticity, validity and effectiveness thereof and shall not
be obligated to make any investigation or determination as to the truth or
accuracy of any information contained therein. In the event of any dispute
between Buyer and Paradigm, Buyer and Paradigm shall pay, on demand, reasonable
attorneys' fees and other reasonable costs and expenses incurred by the Escrow
Agent in respect thereof. Buyer and Paradigm shall be jointly and severally
liable for such fees, costs and expenses, but, as between themselves, such fees,
costs and expenses shall be paid by the party losing such dispute.
9. Indemnification of Escrow Agent. In consideration of its acceptance of
the appointment as Escrow Agent, the other parties hereto, jointly and
severally, agree to indemnify, defend and hold harmless the Escrow Agent from
any against any and all liability incurred by Escrow Agent to any person or
entity by reason of its having accepted the Escrow Shares or in carrying out the
terms hereof, and to reimburse the Escrow Agent for all of its reasonable
expenses (including attorneys' fees and expenses) incurred by reason of its
position hereunder or actions taken pursuant hereto.
10. Miscellaneous.
(a) Notices. Any notice or other communication required or permitted
to be given to the parties hereto shall be in writing and shall be deemed
to have been given if personally delivered, the next business day if
delivered by reputable overnight courier service or three (3) days after
mailing by certified or registered mail, return receipt requested, first
class postage prepaid, addressed as follows (or at such other address as
the addressed party may have substituted by notice pursuant to this Section
10(a)):
If to Buyer:
Accent Acquisitions I, Co.
Suite 220
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
If to Paradigm:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: C.W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
If to Escrow Agent:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
(b) Amendment. The provisions of this Agreement may be waived,
altered, amended or supplemented, in whole or in part, only by a writing
signed by all the parties hereto.
(c) Successor to Escrow Agent. If Escrow Agent is for any reason
unwilling or unable to serve as Escrow Agent during the term of this
Agreement, Escrow Agent may resign as Escrow Agent by giving at least
thirty (30) days prior written notice to the Buyer and Paradigm, such
resignation to be effective thirty (30) days following the date such notice
is given. In addition, Buyer and Paradigm may jointly remove the Escrow
Agent as escrow agent at any time with or without cause, by an instrument
(which may be executed in counterparts) given to the Escrow Agent, which
instrument shall designate the effective date of such removal. In the event
of any such resignation or removal, a successor escrow agent who is not
affiliated with the Buyer shall be appointed by the Buyer with the approval
of Paradigm, which approval shall not be unreasonably withheld.
(d) Interpretation. In the event that the Escrow Agent shall be
uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any
party hereto which, in its opinion, conflict with any of the provisions of
this Agreement, it shall be entitled to refrain from taking any action and
its sole obligation shall be to keep safely all property held in escrow
until it shall be directed otherwise in writing by all of the other parties
hereto or by an order of an arbitrator as provided in Section 4(c) hereof.
The validity, construction, interpretation and enforcement of this
Agreement shall be determined and governed by the laws of the State of
Georgia.
(e) Remedies. The rights and remedies of the parties under this
Agreement and the Purchase Agreement are cumulative and not exclusive of
any rights, remedies, powers and privilege that may otherwise be available
to the parties hereto.
(f) Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original and all of which
shall constitute one agreement.
(g) Assignment. No party may, without the prior express written
consent of each other party, assign this Escrow Agreement in whole or in
part. This Escrow Agreement shall be binding upon and inure to the benefit
of the respective successors and assigns of the parties.
(i) Waivers. Any waiver by any party by any party of any violation of,
breach of or default under any provision of this Agreement, by the other
party shall not be construed as, or constitute, a continuing waiver of such
provision, or waiver of any other violation of, breach of or default under
any other provision of this Agreement or the Purchase Agreement.
(j) Third Parties. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person or
entity other than Buyer, Paradigm and the Escrow Agent any rights or
remedies under or by reason of this Agreement.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties have signed this Escrow Agreement on the
day and year first above written.
BUYER:
ACCENT ACQUISITIONS I, CO.
By: /s/ L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
PARADIGM:
PARADIGM MORTGAGE ASSOCIATES, INC.
By: /s/ C.W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: C. W. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman - CEO
ESCROW AGENT:
▇▇▇▇▇ ▇▇▇▇ LLP
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Partner
