CONSULTING AGREEMENT
This AGREEMENT (the "Agreement") is made as of ___________, 1997 by AJAX
MANUFACTURING COMPANY, a New Jersey corporation (the "Company"), and XXXX
XXXXXXX (the "Consultant").
W I T N E S E T H:
WHEREAS, the Company wishes to avail itself of the consulting services of
the Consultant, and the Consultant wishes to provide his consulting services to
the Company.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Engagement as a Consultant. The Company hereby engages the Consultant as
a consultant to render advice to the Company from time to time during the term
hereof.
2. Term. Subject to the terms and conditions of this Agreement, the
Consultant's engagement by the Company shall be for a term commencing on the
date hereof and expiring on the close of business on the third anniversary of
the date hereof (the "Initial Term"); provided, that the term of the
Consultant's engagement by the Company shall continue thereafter unless and
until either party shall give to the other at least thirty (30) days' advance
written notice ("Notice of Termination") of expiration of the term (the Initial
Term and the period, if any, thereafter, during which the Consultant's
engagement shall continue are collectively referred to as the "Term"). Such
Notice of Termination shall specify the date of expiration (which may not be
earlier than the end of the Initial Term). The Company shall have the right at
any time during any such 30-day notice period to relieve the Consultant of his
responsibilities and to place him on a paid leave-of-absence status; provided,
that during such notice period the Consultant shall continue to receive his
consulting fee and other benefits as provided in this Agreement.
3. Duties and Responsibilities.
(a) It is understood and agreed that the Consultant is an independent
contractor and that the Consultant shall perform his duties hereunder in
compliance with and subject to the direction of, and shall engage in such
assignments as are assigned to him from time to time by, the Board of
Directors of the Company (the "Board"). All such assignments shall not
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obligate Consultant to perform any act which would constitute or require
the violation of any federal, state or local law, rule, regulation,
ordinance or the like. In addition, all such assignments shall require the
performance of services customarily and ordinarily exercised and performed
by an executive officer of a company in the same industry as the business
of the Company acquired by Standard Automotive Corporation from Consultant
(the "Acquired Business"). The Consultant shall report to the Board at such
times and in such detail as the Board shall reasonably require.
(b) The parties contemplate that the Consultant shall be called upon
to provide approximately 40 hours of service to the Company per month. The
parties further contemplate that such service may be rendered in blocks of
consecutive days or weeks during any month and that such service will be
rendered at such places at the Company and the Consultant shall reasonably
determine are appropriate to the completion of the matters assigned to the
Consultant. During the Term the Consultant will (i) devote such of his
business time and attention as is reasonably necessary to render his
services hereunder, and use his best efforts and all his skill and ability
in the performance of his duties hereunder; (ii) carry out his duties in a
competent and professional manner; and (iii) generally promote the
interests of the Company. During the Term it shall not be a violation of
this Agreement for the Consultant to serve on the board of directors of
another corporation, to serve on the board of a cooperative apartment, to
serve on civic or charitable boards or committees, to perform speaking
engagements, to manage his personal investments, or to engage in such other
business as Consultant may pursue in his sole discretion, subject only to
the restrictions on competition between the Company and Consultant set
forth in Section 3.5 of the Stock Purchase Agreement, dated _________ 1997
to which Consultant and Standard Automotive Corporation, a Delaware
corporation, are parties (the "Stock Purchase Agreement") and the
non-competition provisions contained in Section 8 of this Agreement.
(c) The Consultant shall, for all purposes including all applicable
federal, state and local income and employment taxes and withholding
regulations, be deemed to be an independent contractor. The Consultant
shall file all tax returns and pay all relevant taxes to federal and state
and local jurisdictions in respect of his consulting fee hereunder and as
though he were an independent contractor.
4. Consulting Fee. As compensation for services hereunder and in
consideration of his agreement not to compete as set forth in paragraph 8
hereof, the Company shall pay the Consultant a consulting fee at an annual rate
of $160,000, payable in equal installments on a bi-weekly basis.
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5. Expenses. The Company agrees to pay or to reimburse the Consultant
during the Term for all reasonable, ordinary and necessary business or
entertainment expenses incurred in the performance of his services hereunder in
accordance with the policy of the Company as from time to time in effect. The
Consultant, as a condition to obtaining such payment or reimbursement, shall
provide to the Company any and all statements, bills or receipts evidencing the
travel or out-of-pocket expenses for which the Consultant seeks payment or
reimbursement, and any other information or materials, as the Company may from
time to time reasonably require.
6. Termination.
(a) The Company, by direction of the Board, shall have the right to
terminate the Consultant's engagement by the Company at any time for "Cause";
provided, that any termination by the Company for Cause shall be communicated by
the Company to the Consultant in a writing indicating the facts and
circumstances providing the basis for termination for Cause, and the Consultant
shall have the opportunity to contest his termination before the Board. (The
effective date of the Consultant's termination of engagement by the Company,
regardless of the reason, is referred to as the "Date of Termination"). For
purposes of this Agreement, the term "Cause" shall be limited to the following
grounds:
(i) The Consultant's failure or refusal to perform his material duties
and responsibilities as set forth in paragraph 3 hereof (other than any
such failure resulting from Consultant's disability or death which are
governed by Paragraph 7), if such failure or refusal continues for fourteen
(14) days after written warning to the Consultant, which states that the
warning is of a potential termination for Cause under this Agreement, sets
forth the facts and circumstances providing the basis for such termination,
and states that termination will become effective in fourteen (14) days
after the date the notice is delivered (as determined in accordance
herewith) unless such failure or refusal is cured prior to 6:00 p.m. New
York time on such 14th day; provided, however, that if Consultant commences
to correct such failure or refusal within such 14 day period and thereafter
diligently endeavors to correct the same to completion, such 14 day period
shall be automatically extended by the amount of time reasonably necessary
to complete the correction.
(ii) The willful misappropriation of the funds or property of the
Company;
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(iii) Use of alcohol or illegal drugs, interfering with the
performance of the Consultant's obligations under this Agreement,
continuing after written warning;
(iv) Conviction of, or admission of or entry of a plea of nolo
contendere or similar plea with respect to, a felony or of any crime
involving moral turpitude, dishonesty or theft provided that such violation
results in material injury to the business or reputation of the Company.;
(v) The commission by the Consultant of any willful or intentional act
having the effect, or which could reasonably be expected to have the
effect, of materially injuring the reputation, business or business
relationships of the Company; or
(vi) Any breach by the Consultant (not covered by any of clauses (i)
through (v) and other than in connection with the death or disability of
Consultant as set forth in paragraph 7 hereof) of any material provision of
this Agreement, if such breach is not cured within fourteen (14) days after
written notice thereof to the Consultant by the Company.
Upon the termination of the Consultant's engagement by the Company for
Cause, the Company shall pay the Consultant, subject to appropriate offsets, as
permitted by applicable law, for debts or money due to the Company, including
without limitation personal loans to the Consultant and travel advances
("Offset"), his consulting fee only through, and any unpaid reimbursable
expenses outstanding as of, the Date of Termination. Except as provided in this
paragraph 6(a), in connection with the Consultant's termination by the Company
for Cause, the Company shall have no further liability to the Consultant or the
Consultant's heirs, beneficiaries or estate for damages, compensation, benefits,
indemnities or other amount of whatever nature.
(b) In the event the Consultant's engagement by the Company during the Term
is terminated by the Company in breach of this Agreement (a termination "without
Cause"), the Company shall, subject to any Offsets and for so long as the
Consultant is not in breach of his obligations to the Company under paragraph 8
hereof, continue to pay the Consultant his consulting fee under paragraph 4
hereof as and when the Consultant would have otherwise received such consulting
fee. There shall be no offset against amounts due Consultant under this
Agreement on account of any remuneration attributable to any subsequent
employment or consulting work that he may obtain. Except as provided in this
paragraph 6(b), in connection with the Consultant's termination by the Company
without Cause, the Company shall have no further liability to the Consultant or
the
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Consultant's heirs, beneficiaries or estate for damages, compensation, benefits,
indemnities or other amount of whatever nature. If subsequent to the termination
of this Agreement without cause, the Company shall fail to pay the Consultant
his consulting fee in accordance with this paragraph 6(b), and such failure
continues for ten (10) days after written notice from the Consultant to the
Company, the restrictions in paragraph 8(a) hereof and in Section 3.5 of the
Stock Purchase Agreement (notwithstanding any provision to the contrary
contained therein) shall be null and void. In the event the Consultant brings
any proceeding against the Company to enforce his rights under this paragraph
6(b) and prevails (by way of written settlement, arbitration award or judgment),
the Company shall reimburse the Consultant for all reasonable expenses
(including reasonable attorney's fees) which he incurred in connection with such
proceeding.
(c) Consultant may terminate this Agreement, without any breach of this
Agreement, for "Good Reason" if Executive provides written notice (a "Good
Reason Notice") to the Company that an event included in the definition of "Good
Reason" has occurred, sets forth therein the facts and circumstances providing
the basis for a Good Reason termination and further states that unless such
event is cured within 14 days of Company's receipt of a Good Reason Notice,
Consultant will terminate this Agreement. Good Reason shall exist if any one or
more of the following shall occur:
(i) any breach by the Company of any of the material provisions of
this Agreement;
(ii) there are assigned duties and responsibilities materially
inconsistent with those normally assigned to an executive officer of a
company in the same industry as the Acquired Business;
(iii) Company fails to obtain a written agreement for any successor to
the Company to assume and perform this Agreement;
(iv) a change in control of the Company; or
(v) a breach under the promissory note issued by the Company to the
Consultant pursuant to the Stock Purchase and Redemption Agreement between
Consultant and Standard Automotive Corporation, dated _______________,
1997.
In the event the Consultant's engagement with the Company is terminated for
Good Reason, the Company shall, subject to any Offsets and for so long as the
Consultant is not in breach
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of his obligations to the Company under paragraph 8 hereof, continue to pay the
Consultant his consulting fee under paragraph 4 hereof, as and when the
Consultant would have otherwise received such compensation. There shall be no
offset against amounts due Consultant under this Agreement on account of any
remuneration attributable to any subsequent employment or consulting arrangement
that he may obtain. If subsequent to the termination of this Agreement for Good
Reason, the Company shall fail to pay the Consultant his consulting fee in
accordance with this Section 6(c), and such failure continues for ten (10) days
after written notice from the Consultant to the Company, the restrictions in
paragraph 8(a) hereof and in Section 3.5 of the Stock Purchase Agreement
(notwithstanding any provision to the contrary contained therein) shall be null
and void. In the event the Consultant brings any proceeding against the Company
to enforce his rights under this paragraph 6(c) and prevails (by way of written
settlement, arbitration award or judgment), the Company shall reimburse the
Consultant for all reasonable expenses (including reasonable attorney's fees)
which he incurred in connection with such proceeding. Except as provided in this
paragraph 6(c), in connection with the Consultant's termination of the
consulting arrangement for Good Reason, the Company shall have no further
liability to the Consultant or the Consultant's heirs, beneficiaries or estate
for damages, compensation, benefits, indemnities or other amounts of whatever
nature.
For purposes hereof, a "change in control" of the Company shall be deemed
to occur only if subsequent to the acquisition of the Company by Standard
Automotive Corporation: (i) an individual or Group (as that term is defined in
Regulation 13D-G promulgated under the Securities Exchange Act of 1934) (or any
successor regulation) shall acquire the right directly or indirectly to vote
more than 50% of the outstanding common stock of the Company; or (ii) the
Company sells or otherwise disposes of substantially all of its assets.
7. Disability; Death.
(a) In the event the Consultant shall be unable to perform the essential
functions of his duties hereunder by virtue of illness or physical or mental
incapacity or disability (from any cause or causes whatsoever) in substantially
the manner and to the extent required hereunder prior to the commencement of
such disability (all such causes being referred to as "disability") and the
Consultant shall fail to perform such duties for periods aggregating one hundred
and twenty (120) days, whether or not continuous, in any continuous period of
one hundred and eighty (180) days, the Company shall have the right to terminate
the Consultant's engagement hereunder as at the end of any calendar month during
the continuance of such disability upon at least thirty (30) days prior written
notice to him. In
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the event of termination under this paragraph 7(a), the Consultant shall be
entitled to receive when otherwise payable, subject to any Offsets, all
consulting fees earned but unpaid as of the Date of Termination and any unpaid
reimbursable expenses outstanding as of such date; and any benefits to which the
Consultant or his beneficiaries may be entitled under the plans and programs
described in paragraphs 5(b) and (c) hereof as of such Date of Termination shall
be determined in accordance with the terms of such plans and programs. Nothing
contained herein is intended to nullify or diminish the Consultant's rights
under, and this paragraph 7(a) is subject to, the Americans with Disabilities
Act of 1990 and the Family and Medical Leave Act of 1993, as such Acts may be
amended from time to time.
(b) The Consultant's engagement hereunder shall terminate on the date of
the Consultant's death and in such event the Consultant's estate shall be
entitled to receive when otherwise payable, subject to any Offsets, all
consulting fees earned but unpaid as of the date of his death and any unpaid
reimbursable expenses outstanding as of such date.
(c) Except as provided in paragraphs 7(a) and (b) hereof, in the event of
the Consultant's termination due to disability or death, the Company shall have
no further liability to the Consultant or the Consultant's heirs, beneficiaries
or estate for damages, compensation, benefits, indemnities or other amounts of
whatever nature.
8. Non-Competition and Protection of Confidential Information.
(a) The Consultant agrees that his services to the Company are of a
special, unique, extraordinary and intellectual character, and his position with
the Company places him in a position of confidence and trust with the employees
and customers of the Company. Consequently, the Consultant agrees that it is
reasonable and necessary for the protection of the goodwill and business of the
Company that the Consultant make the covenants contained herein. Accordingly,
the Consultant agrees that, subject to the provisions of paragraphs 6(b) and
6(c) hereof, during the period of Consultant's engagement hereunder and for the
period extending one year after the termination hereof, he shall not, except on
behalf of the Company, directly or indirectly:
(i) own, operate, manage or be employed or engaged by or affiliated
with any person or entity that manufactures long-length trailer chassis or
sanitary waste containers or provides consulting services relating to the
foregoing (a "Competing Business") which is located east of the Mississippi
River; or
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(ii) attempt in any manner to solicit to any Competing Business any
customer or supplier of the Company or to persuade any customer or supplier
of the Company to cease to do business or to reduce the amount of business
which any such customer or supplier has customarily done with the Company,
whether or not the relationship between the Company and such customer or
supplier was originally established in whole or in part through his
efforts; or
(iii) employ as an employee or retain as a consultant, or persuade or
attempt to persuade any person who is at the Date of Termination or at any
time during the preceding year was, or in the six (6) months following such
termination becomes, an employee of or exclusive consultant to the Company,
to leave the Company or to become employed as an employee or retained as a
consultant by anyone other than the Company.
As used in this paragraph 8, the term: (i) "Company" shall include
subsidiaries of the Company; and (ii) "customer" and "supplier" shall mean any
person or entity that is a customer or supplier of the Company at the Date of
Termination, or at any time during the preceding year was, or in the six (6)
months following such termination becomes, a customer or supplier of the
Company, or if the Consultant's engagement shall not have terminated, at the
time of the alleged prohibited conduct.
Nothing contained herein shall prevent Consultant from being able to engage
in the business of manufacturing and/or selling suspension parts, air tanks,
short length trailers and/or cement mixers.
(b) The Consultant agrees that he will not at any time (whether during the
Term or after termination of this Agreement), disclose to anyone, any
confidential information or trade secret of the Company or utilize such
confidential information or trade secret for his own benefit, or for the benefit
of third parties, and all memoranda or other documents compiled by him or made
available to him during the Term pertaining to the business of the Company shall
be the property of the Company and shall be delivered to the Company on the Date
of Termination or at any other time, as reasonable, upon request. The term
"confidential information or trade secret" does not include any information
which (i) becomes generally available to the public other than by breach of this
provision or (ii) the Consultant learns from a third party who is not under an
obligation of confidence to the Company or (iii) is required to be disclosed by
law or legal process.
(c) If the Consultant commits a breach or threatens to commit a breach of
any of the provisions of paragraphs 8(a) or (b) hereof, the Company shall have
the right to have the
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provisions of this Agreement specifically enforced by any court having
jurisdiction without being required to post bond or other security and without
having to prove the inadequacy of any other available remedies, it being
acknowledged and agreed that any such breach will cause irreparable injury to
the Company and that money damages will not provide an adequate remedy to the
Company. In addition, the Company may take all such other actions and remedies
available to it in law or in equity and shall be entitled to such damages as it
can show it has sustained by reason of such breach.
(d) The parties acknowledge that the type and periods of restriction
imposed in the provisions of paragraphs 8(a) and (b) hereof are fair and
reasonable and are reasonably required for the protection of the Company and the
goodwill associated with the business of the Company; and that the time, scope,
geographic area and other provisions of this paragraph 8 have been specifically
negotiated by sophisticated parties and accordingly it is reasonable that the
restrictive covenants set forth herein are not limited by narrow geographic
area. If any of the covenants in paragraphs 8(a) or (b) hereof, or any part
thereof, is hereafter construed to be invalid or unenforceable, it is the
intention of the parties that the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect, without regard to the
invalid portions. If any of the covenants contained in paragraphs 8(a) or (b),
or any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination should reduce the duration and/or areas of such provision
such that, in its reduced form, said provision shall then be enforceable. The
parties intend to and hereby confer jurisdiction to enforce the covenants
contained in paragraphs 8(a) and (b) upon the courts of any jurisdiction within
the geographical scope of such covenants. In the event that the courts of any
one or more of such jurisdictions shall hold such covenants wholly unenforceable
by reason of the breadth of such time, scope or geographic area, it is the
intention of the parties hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other jurisdiction within the geographical scope of such covenants, as to
breaches of such covenants in such other respective jurisdictions, the above
covenants as they relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.
9. Intellectual Property. During the Term, the Consultant will disclose to
the Company all ideas, inventions, advertising campaigns, designs, logos,
slogans, processes, operations, products or improvements which may be patentable
or copyrightable or subject to any trade or service xxxx or name, and business
plans developed by him during such period, either individually or
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in collaboration with others, which relate to the Acquired Business
("Intellectual Property"). Intellectual Property does not include any such
property created or developed by Consultant in connection with any business or
endeavor which Consultant is entitled to engage in during the Term in accordance
with the Stock Purchase Agreement and this Agreement. The Consultant agrees that
such Intellectual Property will be the sole property of the Company and that he
will at the Company's request and cost do whatever is reasonably necessary to
secure the rights thereto by patent, copyright, trademark or otherwise to the
Company.
10. Enforceability. The failure of either party at any time to require
performance by the other party of any provision hereunder shall in no way affect
the right of that party thereafter to enforce the same, nor shall it affect any
other party's right to enforce the same, or to enforce any of the other
provisions in this Agreement; nor shall the waiver by either party of the breach
of any provision hereof be taken or held to be a waiver of any subsequent breach
of such provision or as a waiver of the provision itself.
11. Assignment. This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, heirs, executors, administrators
and other legal representatives. Neither this Agreement nor any right or
obligation hereunder may be sold, transferred, assigned, pledged or hypothecated
by either party hereto without the prior written consent of the other party;
provided, the Company may assign its rights and obligations under the Agreement
in connection with the sale or other transfer of all or substantially all of the
Company's business (whether by way of sale of stock, assets, merger or
otherwise).
12. Severability. In the event any provision of this Agreement is found to
be void and unenforceable by a court of competent jurisdiction, the remaining
provisions of this Agreement shall nevertheless be binding upon the parties with
the same effect as though the void or unenforceable part had been severed and
deleted.
13. Life Insurance. The Consultant agrees that the Company shall have the
right to obtain life insurance on the Consultant's life, at the Company's sole
expense and with the Company as the sole beneficiary thereof to that end, the
Consultant shall (a) cooperate fully with the Company in obtaining such life
insurance, (b) sign any necessary consents, applications and other related forms
or documents and (c) take any reasonably required medical examinations.
14. Notice. Any notice, request, instrument or other document to be given
under this Agreement by either party hereto
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to the other shall be in writing and shall be deemed effective (a) upon personal
delivery, if delivered by hand, (b) three (3) days after the date of deposit in
the mails, postage prepaid, if mailed by certified or registered mail, or (c) on
the next business day, if sent by a prepaid overnight courier service, and in
each case addressed as follows:
If to the Consultant:
Xxxx Xxxxxxx
0000 Xxxxx Xxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
with a copy to:
XxXxxxxxxx, Keen & Xxxxxxx
Radnor Court
000 Xxxxxx-Xxxxxxx Xxxx
Xxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
If to the Company:
Ajax Manufacturing Company
000 Xxxxxx Xxxx
Xxxxxxxxxxxx Xxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: President and Secretary
Fax:
with a copy to:
Xxxxxxxx Xxxxx Xxxxxxxx Xxxx & Ballon LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. XxXxxx, Esq.
Fax: (000) 000-0000
Any party may change the address to which notices are to be sent by giving
notice of such change of address to the other party in the manner herein
provided for giving notice.
15. No Conflict. The Consultant represents and warrants that he is not
subject to any agreement, instrument, order, judgment or decree of any kind, or
any other restrictive agreement of any character, which would prevent him from
entering into this Agreement or which would be breached by the Consultant upon
the performance of his duties pursuant to this Agreement.
16. Certain Obligations. The Company will exercise its best efforts to
obtain for Consultant a release from all
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obligations of the Company that are guaranteed by the Consultant as of the date
hereof and will indemnify the Consultant and hold him harmless from any
obligations under said guarantee or guarantees. The provisions of this paragraph
shall survive the termination of this Agreement.
17. Miscellaneous.
(a) The headings contained in this Agreement are for reference purposes
only, and shall not affect the meaning or interpretation of this Agreement.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey, without regard to the conflict of law
principles thereof.
(c) This Agreement, represents the entire agreement between the Company and
the Consultant with respect to the subject matter hereof, and all prior
agreements relating to the engagement of the Consultant, written or oral, are
nullified and superseded hereby.
(d) This Agreement may not be orally canceled, changed, modified or
amended, and no cancellation, change, modification or amendment shall be
effective or binding, unless in writing and signed by both parties to this
Agreement, and any provision hereof may be waived only by an instrument in
writing signed by the party or parties against whom or which enforcement of such
waiver is sought.
(e) As used in this Agreement, any gender includes a reference to all other
genders and the singular includes a reference to the plural and vice versa.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
AJAX MANUFACTURING COMPANY
By: _______________________________________
Name:
Title:
___________________________________________
XXXX XXXXXXX
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GUARANTY
For good and valuable consideration, the receipt of which is acknowledged
by the undersigned, and intending to be legally bound hereby, the undersigned
agrees that payment of any amounts due and owing hereunder from the Company to
Consultant shall be guaranteed by the undersigned in the event that the Company
fails to pay any such amount to Consultant when due under the terms of this
Agreement.
STANDARD AUTOMOTIVE CORPORATION
By:_________________________________
Name:
Title:
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