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Exhibit 99.2
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made as of December 29,
2000, by and among S2 GOLF INC., a New Jersey corporation ("Acquiror"), S2 GOLF
ACQUISITION CORP. ("Surviving Corporation"), LADIES GOLF EQUIPMENT COMPANY,
INC., a Florida corporation ("the Company"), JAMES E. JONES ("Mr. Jones"), BRIAN
CHRISTOPHER ("Mr. Christopher" and together with Mr. Jones, the "Shareholders")
and KEY TRUST COMPANY OF OHIO, N.A., as escrow agent (the "Escrow Agent").
RECITALS:
A. Acquiror, the Surviving Corporation, the Company and the
Shareholders have entered into an Agreement and Plan of Reorganization dated as
of September 22, 2000 (the "Reorganization Agreement"), pursuant to which the
Company merged into the Surviving Corporation as of the date hereof.
B. The Acquiror and the Shareholders have agreed to place in
escrow the share certificates for 75,000 shares of common stock of Acquiror (the
"Escrow Shares"), which represent a portion of the merger consideration under
the Reorganization Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Creation of Escrow.
(a) The Shareholders hereby agree to deposit the Escrow Shares,
together with stock power endorsed in blank, with the Escrow Agent. The Escrow
Agent hereby agrees to accept the Escrow Shares and to hold the same in an
escrow account pursuant to the terms of this Agreement.
(b) The Escrow Agent has no obligations with respect to the Escrow
Shares other than the obligations to hold and to distribute the Escrow Shares
according to the terms of this Agreement.
2. Distribution of Escrow Shares.
(a) The Acquiror and the Shareholders shall authorize the Escrow
Agent to distribute the Escrow Shares by written joint distribution instructions
in accordance with the terms of the Reorganization Agreement.
(b) Immediately upon distributing the Escrow Shares as directed
pursuant to such joint written instructions, the Escrow Agent shall have no
further obligations hereunder and this Agreement shall terminate without further
action by any party hereto.
3. The Escrow Agent.
(a) The Escrow Agent shall not deal with the Escrow Shares except
in accordance with (i) this Agreement, or (ii) written instructions given in
conformity with this Agreement. The
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Escrow Agent shall not be bound in any other way by the Reorganization
Agreement, it being understood that the Escrow Agent's only duties and
responsibilities shall be to hold and distribute the Escrow Shares in accordance
with the terms of this Agreement. The Escrow Agent shall have no liability with
respect to any action taken by it except for its own gross negligence or willful
misconduct. The Escrow Agent makes no representations and has no responsibility
as to the validity, genuineness or sufficiency of any of the documents or
instruments included in the subject matter of the escrow. The Escrow Agent shall
be entitled to rely, and shall be protected in acting in reliance upon, any
instructions or directions furnished to it in writing or pursuant to any
provisions of this Agreement and shall be entitled to treat as genuine, and as
the document it purports to be, any letter, paper or other document furnished to
it and believed by it to be genuine and to have been signed and presented by the
proper party or parties. The Escrow Agent may act in reliance upon the advice of
counsel satisfactory to it in reference to any matter in connection with the
escrow and shall not incur any liability for any action taken in good faith in
accordance with such advice. In no event shall the Escrow Agent be required to
notify or obtain the consent, approval, authorization or order of any court or
governmental body pursuant to the transactions contemplated by the provisions of
this Agreement.
(b) Acquiror shall pay the Escrow Agent's reasonable annual
compensation for the services to be rendered hereunder, agreed to be $750.00.
(c) The Escrow Agent shall have first lien on all items held by it
hereunder for its compensation and shall not be required to deliver the Escrow
Shares deposited with it under this Agreement unless and until it shall have
received full payment for its compensation.
(d) The Escrow Agent shall not be liable to anyone whatsoever by
reason of any error of judgment or for any act done or step taken or omitted by
it in good faith or for any mistake of fact or law or for anything which it may
do or refrain from doing in connection herewith unless caused by or arising out
of its own gross negligence or willful misconduct. In no event shall the Escrow
Agent be liable for any special or consequential damages caused by its gross
negligence or willful misconduct.
4. Representations and Covenants of Acquiror and the
Shareholders.
(a) The Escrow Shares appear as issued and outstanding on the
balance sheet of Acquiror, and are legally issued and outstanding under
applicable New Jersey laws.
(b) All dividends paid on the Escrow Shares, if any, will be
distributed currently to the Selling Shareholders.
(c) All voting rights of the Escrow Shares are exercisable by or
on behalf of the Shareholders or their authorized agent.
(d) The Shareholders and Acquiror agree to take all steps in the
calculation of the Merger Consideration Adjustment (as defined in Section 3.4 of
the Reorganization Agreement) in a timely manner so that all Escrow Shares will
be released from the escrow arrangement within one (1) year from the date
hereof, except in the event of a bona fide dispute of the Merger Consideration
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Adjustment. In the event of such dispute, any Escrow Shares that are not subject
to the dispute will be released from the escrow arrangement within one (1) year
from the date hereof.
(e) The distribution of the Escrow Shares will occur only upon the
conditions set forth in Section 3.4 of the Reorganization Agreement. The
mechanism for the calculation of the number of Escrow Shares to be distributed
to Acquiror and to the Shareholders is limited solely to the Merger
Consideration Adjustment set forth in Section 3.4 of the Reorganization
Agreement. The distribution of any Escrow Shares to Acquiror or to the
Shareholders will be determined only by the amount of the Merger Consideration
Adjustment, as determined by the Accountant (as defined in the Reorganization
Agreement), which is not an event the occurrence or nonoccurrence of which is
within the control of the Shareholders.
(f) The Escrow Shares are not subject to restrictions requiring
their return to Acquiror because of the death of the Shareholders, or failure or
the Shareholders to continue employment or similar restrictions.
(g) No Escrow Shares will be distributed to Acquiror as a result
of the payment of additional tax or reduction in tax paid as a result of an
Internal Revenue Service audit of the Shareholders or Acquiror with respect to
the Merger, as defined in the Reorganization Agreement.
(h) The number of Escrow Shares to be distributed to Acquiror, as
set forth in Section 3.4 of the Reorganization Agreement, is based on the
initial negotiated value thereof. The Selling Shareholders do not have the right
to substitute other property for the Escrow Shares in the event of the
occurrence of a Merger Consideration Adjustment.
5. Adverse Claims. The duties and obligations of the Escrow Agent
shall be determined solely by the express provisions of this Agreement. The
Escrow Agent's duties and obligations are purely ministerial in nature, and
nothing herein shall be construed to give rise to any fiduciary obligations of
the Escrow Agent. In the event of any disagreement over the presentation of any
adverse claim or demand in connection with the distribution of the Escrow
Shares, the Escrow Agent shall, at its option, be entitled to refuse to comply
with any such claims or demands during the continuance of such disagreement and
may refrain from delivering any item affected thereby, and in so doing, the
Escrow Agent shall not become liable to undersigned or to any other person, due
to its failure to comply with such adverse claim or demand. The Escrow Agent
shall be entitled to continue, without liability, to refrain and refuse to act:
(a) Until authorized to distribute the Escrow Shares by a
court order from a court having jurisdiction of the parties and the
Escrow Shares, after which time the Escrow Agent shall be entitled to
act in conformity with such adjudication; or
(b) Until all differences shall have been adjusted by
agreement and the Escrow Agent shall have been notified thereof and
shall have been directed in writing, signed jointly or in counterparts
by the Acquiror and the Company and by all persons making adverse
claims or demands, at which time the Escrow Agent shall be protected in
acting in compliance therewith.
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All costs and expenses of the Escrow Agent incurred by reason of any
disagreement with respect to the presentation of any adverse claim or demand in
connection with distribution of the Escrow Shares shall be paid by the party
determined to be the non-prevailing party.
6. Indemnification. The Acquiror and the Shareholders jointly and
severally agree to indemnify, defend and hold harmless the Escrow Agent from and
against all losses, damages, costs, charges, payments, liabilities, and
expenses, including the costs of litigation, investigation and reasonable legal
fees incurred by the Escrow Agent and arising directly or indirectly out of its
role as Escrow Agent pursuant to this Agreement, except as caused by its gross
negligence or willful misconduct. The parties hereto agree that the Escrow Agent
does not assume any responsibility for the failure of any of the parties to
perform the conditions of this Agreement as set forth herein. The Escrow Agent
may consult with counsel of its own choice and shall have full and complete
authorization and protection for any action taken or suffered by it hereunder in
good faith and in accordance with the opinion of such counsel. The provisions of
this Section 6 shall survive termination of this Agreement.
7. Expenses. The costs and expenses of the Escrow Agent incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the Acquiror or the Surviving Corporation prior to distribution of
the Escrow Shares hereunder. The Shareholders agree to reimburse the Acquiror or
the Surviving Corporation, as the case may be, for one-half of any costs and
expenses of the Escrow Agent that are paid by the Acquiror.
8. Confidentiality. The Escrow Agent shall keep confidential the
terms and conditions of this Agreement as well as the transactions contemplated
hereby and any information received in connection therewith regarding business
and financial operations matters of and concerning the Acquiror, the Surviving
Corporation, the Company, or the Shareholders (the "Confidential Information"),
and the Escrow Agent shall refrain from disclosure of the Confidential
Information to any third party either during the pendency or subsequent to the
termination of this Agreement.
9. Notices. All notices and other communications hereunder shall
be in writing and shall be acceptable if (a) delivered personally or by telecopy
or (b) if sent by registered or certified mail (return receipt requested), and
postage prepaid, or (c) if sent by reputable overnight courier, so long as the
parties to this Agreement receive such notices at the following addresses or at
such other address for a party as shall be specified by like notice.
If to the Acquiror: Mr. Douglas A. Buffington
S2 Golf Inc.
18 Gloria Lane
Fairfield, NJ 07004
Phone: (973) 227-7783
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With a copy to: Richard M. Maurer
Wesmar Partners Limited Partnership
Three Gateway Center
401 Liberty Avenue
Pittsburgh, PA 15222
Phone: (412) 392-2350
and to: Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, Ohio 44114-1304
Phone: (216) 479-8654; Fax: (216) 479-8776
ATTN: Mary Ann Jorgenson
If to Jones: James E. Jones
Suite 400
3803 Corporex Park Drive
Tampa, FL 33619
With a copy to: Holland & Knight LLP
400 North Ashley Drive, Suite 2300
Tampa, Florida 3602
ATTN: Douglas A. Wright, Esq.
If to Christopher: Brian Christopher
6202 Emmons Lane
Tampa, Florida 33642
If to Escrow Agent: Key Trust Company of Ohio, N.A.
127 Public Square
Cleveland, Ohio 44114
Fax: (216) 689-3777
ATTN: Terry Stone
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or by telecopy, or on the date of
receipt, if mailed, or one day after mailing, if by overnight courier. Any party
giving notice under this Agreement to one party to this Agreement shall be
required to give such notice to all parties to this Agreement in order for such
notice to be effective.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, written and oral.
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10. Applicable Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
11. Section Headings. The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be a single agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have signed their names as of the
date first written above.
S2 GOLF INC.
By: /s/ Douglas A. Buffington
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Douglas A. Buffington
President
S2 GOLF ACQUISITION CORP.
By: /s/ Douglas A. Buffington
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Douglas A. Buffington
President
KEY TRUST COMPANY OF OHIO, N.A.
By: /s/ Terry Stone
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Terry Stone
SHAREHOLDERS
/s/ James E. Jones
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James E. Jones
/s/ Brian Christopher
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Brian Christopher
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