Exhibit 10.3
ESCROW DEPOSIT AGREEMENT
AGREEMENT dated as of this 5th day of May 2006, by and among FMFG
OWNERSHIP, INC. ("FMFG"), a Delaware corporation, having an address at 10800
Midlothian Turnpike, Suite 309, Richmond, VA 23235, FIRST MONTAUK FINANCIAL
CORP. ("FMFC" or "First Montauk"), a New Jersey corporation, having an office at
Parkway 109 Office Center, 328 Newman Springs Road, Red Bank, 07701, and
SIGNATURE BANK (the "Escrow Agent"), a New York State chartered bank and having
an office at 261 Madison Avenue, New York, NY 10016.
WITNESSETH:
WHEREAS, FMFG and First Montauk have agreed that a certain sum of money
shall be held in escrow upon certain terms and conditions; and
WHEREAS, FMFG and First Montauk appoint Escrow Agent as escrow agent of
such escrow subject to the terms and conditions set forth in this Escrow Deposit
Agreement ("Agreement"); and
WHEREAS, Escrow Agent accepts such appointment as escrow agent subject
to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, IT IS AGREED as follows:
1. Delivery of Escrow Funds. FMFG and First Montauk will deliver, or shall be
caused to be delivered, to the Escrow Agent checks made payable to the order of
Signature Bank as Escrow Agent for TWO MILLION DOLLARS AND NO CENTS
($2,000,000.00) to be held in an account at Signature Bank entitled "Signature
Bank as Escrow Agent for FMFG OWNERSHIP, INC. & FIRST MONTAUK FINANCIAL CORP."
(the "Escrow Account"). The Escrow Agent shall have no duty or responsibility to
enforce the collection or demand payment of these checks or any other funds
delivered to Escrow Agent for deposit into the Escrow Account. If, for any
reason, these checks or any other funds deposited into the Escrow Account shall
be returned unpaid to the Escrow Agent, the sole duty of the Escrow Agent shall
be to advise FMFG and First Montauk promptly thereof and return check in the
manner directed in writing by FMFG and First Montauk. The collected funds
deposited into the Escrow Account are referred to as the "Escrow Funds".
For purposes of the deposit of the Escrow Funds, the wire transfer instructions
of the Escrow Agent are as follows: Signature Bank, 261 Madison Avenue, New
York, NY 10016, ABA# 026013576, Beneficiary Account Title: Signature Bank as
Escrow Agent for FMFG OWNERSHIP, INC. & FIRST MONTAUK FINANCIAL CORP.,
Beneficiary Account No. 1500768106.
2. Acceptance by Escrow Agent. The Escrow Agent hereby accepts and agrees to
perform its obligations hereunder, provided that:
(a) The names and true signatures of each individual authorized to act singly on
behalf of FMFG and First Montauk are stated in Schedule A. The Escrow Agent may
act in reliance upon any signature believed by it to be genuine, and may assume
that any person who has been designated in Schedule A to give any written
instructions, notice or receipt, or make any statements in connection with the
provisions hereof has been duly authorized to do so. Escrow Agent shall have no
duty to make inquiry as to the genuineness, accuracy or validity of any
statements or instructions or any signatures on statements or instructions. The
names and true signatures of each individual authorized to act singly on behalf
of FMFG and First Montauk are stated in Schedule A, which is attached hereto and
made a part hereof.
(b) The Escrow Agent may act relative hereto in reliance upon advice of counsel
in reference to any matter connected herewith. The Escrow Agent shall not be
liable for any mistake of fact or error of judgment or law, or for any acts or
omissions of any kind, unless caused by its willful misconduct or gross
negligence.
(c) In the event of any disagreement between or among FMFG and First Montauk, or
between any of them and any other person, resulting in adverse claims or demands
being made to Escrow Agent in connection with the Escrow Account, or in the
event that the Escrow Agent, in good faith, be in doubt as to what action it
should take hereunder, the Escrow Agent may, at its option, refuse to comply
with any claims or demands on it, or refuse to take any other action hereunder,
so long as such disagreement continues or such doubt exists, and in any such
event, the Escrow Agent shall not become liable in any way or to any person for
its failure or refusal to act, and the Escrow Agent shall be entitled to
continue so to refrain from acting until (i) the rights of all parties shall
have been fully and finally adjudicated by a court of competent jurisdiction, or
(ii) all differences shall have been adjusted and all doubt resolved by
agreement among all of the interested persons, and the Escrow Agent shall have
been notified thereof in writing signed by all such persons. The Escrow Agent
shall have the option, after 30 days' notice to FMFG and First Montauk of its
intention to do so, to file an action in interpleader requiring the parties to
answer and litigate any claims and rights among themselves. The rights of the
Escrow Agent under this paragraph are cumulative of all other rights which it
may have by law or otherwise.
(d) In the event that the Escrow Agent shall be uncertain as to its duties or
rights hereunder, the Escrow Agent shall be entitled to (i) refrain from taking
any action other than to keep safely the Escrow Funds until it shall be directed
otherwise by a court of competent jurisdiction, or (ii) deliver the Escrow Funds
to a court of competent jurisdiction.
(e) The Escrow Agent shall have no duty, responsibility or obligation to
interpret or enforce the terms of any agreement other than Escrow Agent's
obligations hereunder, and the Escrow Agent shall not be required to make a
request that any monies be delivered to the Escrow Account, it being agreed that
the sole duties and responsibilities of the Escrow Agent to the extent not
prohibited by applicable law shall be (i) to accept checks or other instruments
for the payment of money delivered to the Escrow Agent for the Escrow account
and deposit said checks or instruments into the Escrow Account, and (ii) to
disburse or refrain from disbursing the Escrow Funds as stated herein, provided
that the checks or instruments received by the Escrow Agent have been collected
and are available for withdrawal.
4. Investment. The Escrow Funds shall be held and invested in a
non-interest bearing demand deposit at Signature Bank.
5. Release of Escrow Funds. The Escrow Funds shall be paid by the Escrow Agent
in accordance with the written instructions, in form and substance satisfactory
to the Escrow Agent, received jointly from FMFG and First Montauk or in absence
of such joint instructions in accordance with the order of a court of competent
jurisdiction. The Escrow Agent shall not be required to pay any uncollected
funds or any funds that are not available for withdrawal. The Escrow Agent may
act in reliance upon any instructions, court orders, notices, certifications,
demands, consents, authorizations, receipts, powers of attorney or other
writings delivered to it without being required to determine the authenticity or
validity thereof or the correctness of any fact stated therein, the propriety or
validity of the service thereof, or the jurisdiction of the court issuing any
judgment or order. The Escrow Agent may act in reliance upon any signature
believed by it to be genuine, and may assume that such person has been properly
authorized to do so.
6. Resignation and Termination of the Escrow Agent. The Escrow Agent may resign
at any time by giving 30 days' written notice of such resignation to FMFG and
First Montauk. Upon providing such notice, the Escrow Agent shall have no
further obligation hereunder except to hold the Escrow Funds that it has
received as of the date on which it provided the notice of resignation as
depositary. In such event, the Escrow Agent shall not take any action until FMFG
and First Montauk jointly designates a banking corporation, trust company,
attorney or other person as successor escrow agent. Upon receipt of such written
instructions signed jointly by FMFG and First Montauk, the Escrow Agent shall
promptly deliver the Escrow Funds, net of any outstanding charges, to such
successor escrow agent and shall thereafter have no further obligations
hereunder. If such instructions are not received within 30 days following the
effective date of such resignation, then the Escrow Agent may deposit the Escrow
Funds and any other amounts held by it pursuant to this Agreement with a clerk
of a court of competent jurisdiction pending the appointment of a successor
escrow agent. In either case provided for in this paragraph, the Escrow Agent
shall be relieved of all further obligations and released from all liability
thereafter arising with respect to the Escrow Funds.
7. Termination. FMFG and First Montauk may terminate the appointment of the
Escrow Agent hereunder upon a joint written notice to Escrow Agent specifying
the date upon which such termination shall take effect. In the event of such
termination, FMFG and First Montauk shall, within 30 days of such notice,
jointly appoint a successor escrow agent and the Escrow Agent shall, upon
receipt of written instructions signed by both FMFG and First Montauk, turn over
to such successor escrow agent all of the Escrow Funds; provided, however, that
if FMFG and First Montauk fail to appoint a successor escrow agent within such
30-day period, such termination notice shall be null and void and the Escrow
Agent shall continue to be bound by all of the provisions hereof. Upon receipt
of the Escrow Funds, the successor escrow agent shall become the Escrow Agent
hereunder and shall be bound by all of the provisions hereof and the Escrow
Agent shall be relieved of all further obligations and released from all
liability thereafter arising with respect to the Escrow Funds.
8. Costs, Expenses and Fees. Escrow Agent shall be entitled, for the duties to
be performed by it hereunder, to a fee of $2,500.00, which fee shall be paid
jointly by FMFG and First Montauk upon the signing of this Agreement. In
addition, FMFG and Part B shall be obligated to reimburse Escrow Agent for all
fees, costs and expenses incurred or that becomes due in connection with this
Agreement or the Escrow Account, including reasonable attorney's fees. Neither
the modification, cancellation, termination or rescission of this Agreement nor
the resignation or termination of the Escrow Agent shall affect the right of
Escrow Agent to retain the amount of any fee which has been paid, or to be
reimbursed or paid any amount which has been incurred or becomes due, prior to
the effective date of any such modification, cancellation, termination,
resignation or rescission. If said amounts are not paid within 30 days from the
date they are due or by the date this Agreement terminates, if earlier, then the
Escrow Agent may use funds in the Escrow Account to pay said amounts.
9. Notices. All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if sent by hand-delivery, by facsimile followed by first-class
mail, by nationally recognized overnight courier service or by prepaid
registered or certified mail, return receipt requested, to the addresses set
forth below.
If to FMFG:
FMFG OWNERSHIP, INC.
10800 Midlothian Turnpike, Suite 309
Richmond, VA 23235
Attention: Lara Coleman
Fax No: (804) 594-3556
If to First Montauk:
FIRST MONTAUK FINANCIAL CORP.
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, NJ 07701
Attention: Victor K. Kurylak
Fax No.: (732) 842-9047
If to Escrow Agent:
Signature Bank
261 Madison Avenue
New York, New York 10016
Attention: Arlene Eliades, Group Director and
Senior Vice President
Fax No.: 646-822-1364
11. Indemnification: FMFG and First Montauk, jointly and severally, agree to
indemnify and hold the Escrow Agent harmless from and against any and all
claims, losses, costs, liabilities, damages, suits, demands, judgments or
expenses, including, but not limited to, attorney's fees, costs and
disbursements, (collectively "Claims") claimed against or incurred by Escrow
Agent arising out of or related, directly or indirectly, to the Escrow Agreement
and the Escrow Agent's performance hereunder or in connection herewith, except
to the extent such Claims arise from Escrow Agent's willful misconduct or gross
negligence as adjudicated by a court of competent jurisdiction.
12. General.
(a) This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York applicable to agreements made and to be
entirely performed within such State without regard to choice of law principles.
The parties hereto irrevocably and unconditionally submit to the jurisdiction of
a federal or state court located in the Borough of Manhattan, City, County and
State of New York, in connection with any proceedings commenced regarding this
Escrow Agreement, including but not limited to, any interpleader proceeding or
proceeding for the appointment of a successor escrow agent the Escrow Agent may
commence pursuant to this Agreement, and all parties irrevocably submit to the
jurisdiction of such courts for the determination of all issues in such
proceedings, without regard to any principles of conflicts of laws, and
irrevocably waive any objection to venue or inconvenient forum.
(b) This Agreement sets forth the entire agreement and understanding of the
parties in respect to the matters contained herein and supersedes all prior
agreements, arrangements and understandings relating thereto. (c) All of the
terms and conditions of this Agreement shall be binding upon, and inure to the
benefit of and be enforceable by, the parties hereto.
(d) This Agreement may be amended, modified, superseded or canceled, and any of
the terms or conditions hereof may be waived, only by a written instrument
executed by each party hereto or, in the case of a waiver, by the party waiving
compliance. The failure of any party at any time or times to require performance
of any provision hereof shall in no manner affect its right at a later time to
enforce the same. No waiver of any party of any condition, or of the breach of
any term contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term of this Agreement. No party may
assign any rights, duties or obligations hereunder unless all other parties have
given their prior written consent. (e) If any provision included in this
Agreement proves to be invalid or unenforceable, it shall not affect the
validity of the remaining provisions.
(f) This Agreement and any modification or amendment of this Agreement may be
executed in several counterparts or by separate instruments and all of such
counterparts and instruments shall constitute one agreement, binding on all of
the parties hereto.
13. Form of Signature. The parties hereto agree to accept a facsimile
transmission copy of their respective actual signatures as evidence of their
actual signatures to this Agreement and any modification or amendment of this
Agreement; provided however, that each party who produces a facsimile signature
agrees, by the express terms hereof, to place, promptly after transmission of
his or her signature by fax, a true and correct original copy of his or her
signature in overnight mail to the address of the other party.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first set forth above.
FMFG: FMFG OWNERSHIP, INC.
/s/ Lara Coleman
By: -------------------------------------------
Name: Lara Coleman
Title: Chief Operating Officer
FIRST MONTAUK: FIRST MONTAUK FINANCIAL CORP.
/s/ Victor K. Kurylak
By: -------------------------------------------
Name: Victor K. Kurylak
Title: President and Chief Executive Officer
ESCROW AGENT: SIGNATURE BANK
/s/ Arlene Eliades
By: --------------------------------------------
Name: Arlene Eliades
Title: Group Director and Senior Vice President
/s/ Marilyn Feeney
By: ---------------------------------------------
Name: Marilyn Feeney
Title: Vice President
Schedule A
The Escrow Agent is authorized to accept instructions signed or
believed by the Escrow Agent to be signed by any one of the following on behalf
of FMFG OWNERSHIP, INC. ("FMFG") and FIRST MONTAUK FINANCIAL CORP.
("First Montauk").
FMFG OWNERSHIP, INC. ("FMFG")
Name True Signature
Edward H. Okun /s/ Edward H. Okun
-----------------------------
Lara Coleman /s/ Lara Coleman
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FIRST MONTAUK FINANCIAL CORP. ("First Montauk")
Name True Signature
Victor K. Kurylak /s/ Victor K. Kurylak
-----------------------------
Robert I. Rabinowitz /s/ Robert I. Rabinowitz
-----------------------------