EXHIBIT "B"
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Escrow Agreement") is entered into
effective as of January 31, 1998 by and between XXXXX XXXXX, XXXXX XXXXX,
XXXXXXXXX X. XXXXXX, XXXXXXX X. XXXXX, and XXXXXXXX XXXXXXXX, on the one hand
(each a "Shareholder" and together the "Shareholders"), AMERICAN CUSTOM
COMPONENTS, INC., a Nevada corporation ("ACC"), on the other hand, and MRC LEGAL
SERVICES CORPORATION, a California corporation, as escrow agent ("Escrow
Agent").
R E C I T A L S
A. ACC and the Shareholders are parties to a Stock Purchase Agreement
dated as of even date herewith (the "Agreement").
B. As a condition to the Agreement, ACC has agreed to deposit with the
Escrow Agent a certificate or certificates representing 25,000 shares of
"restricted" ACC Common Stock (the "ACC Shares"), together with a Stock Power
sufficient to transfer all right, title and interest in the ACC Shares to the
Shareholders, or their designees, in form and substance satisfactory to the
Shareholders, as shall be effective to vest in the Shareholders all right, title
and interest in and to all of the ACC Shares. The purpose of this Escrow
Agreement is to (i) provide a method whereby ACC is compensated by withholding
delivery of the ACC Shares upon a breach of the Agreement, and (ii) provide a
method whereby the Shareholders are compensated by accelerating delivery of the
ACC Shares upon a breach of that certain Promissory Note executed by ACC of even
date herewith (the "Note") and/or a breach of the UBOC Debt as assumed by ACC in
accordance with Section 1.3.3.1 of the Agreement.
C. Escrow Agent has agreed to act as the escrow agent hereunder, in
accordance with the terms and conditions set forth in this Escrow Agreement.
NOW THEREFORE, for and in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
1. APPOINTMENT OF ESCROW AGENT. The Parties hereby mutually appoint and
designate the Escrow Agent to receive, hold and release, as escrow agent, the
ACC Shares and the Escrow Agent hereby accepts such appointment and designation.
2. ESCROW DELIVERY. On or before Closing Date as set forth in the
Agreement, ACC shall deliver or cause to be delivered a certificate or
certificates representing the ACC Shares, together with a Stock Power sufficient
to transfer all right, title and interest in the ACC Shares to the Shareholders,
in form and substance satisfactory to the Shareholders, as shall be effective to
vest in the Shareholders all right, title and interest in and to all of the ACC
Shares, to the Escrow Agent.
3. CONDITIONS OF ESCROW.
3.1 THE ESCROW DEPOSIT. Escrow Agent shall hold and release
the ACC Shares as follows:
a. RELEASE OF THE ACC SHARES FROM ESCROW. The Escrow Agent
shall release and distribute the ACC Shares as follows:
i. The ACC Shares shall be released to the
Shareholders on or before January 31, 1999,
unless one of the three following events has
occurred: (A) ACC has given written notice
to the Shareholders and the Escrow Agent
prior to January 31, 1999 of a breach of the
Agreement, in which event the ACC Shares
described in this paragraph shall not be
released in accordance with this Section
3.1(a)(i) but instead in accordance with
Section 3.1(a)(ii); or (B) ACC has not made
payment under the terms of the Note within
fourteen (14) days of the date for delivery,
in which event the ACC Shares shall be
released to the Shareholders upon written
instructions from the Shareholders to do so;
or (C) ACC has defaulted on the UBOC Debt by
not making payment in a timely manner as set
forth in Section 1.3.3.1 of the Agreement,
or ACC has breached any other material term
of the Agreement, in which event the ACC
Shares shall be released to the Shareholders
upon written instructions from the
Shareholders to do so.
ii. All or any portion of the ACC Shares shall be
released to the Shareholders or ACC, as the case
may be, pursuant to (a) written instructions
executed by both the Shareholders and ACC, or (b)
any "final order" of a court of competent
jurisdiction, any such order being deemed to be
"final" if (i) such order has not been reserved,
stayed, enjoined, set aside, annulled or
suspended, (ii) no request for a stay, suspension
or an injunction, petition for reconsideration or
appeal, or sua sponte action with comparable
effect is sua sponte pending with respect to the
order, and (iii) the time for filing any such
request, petition or appeal or further taking of
any such sua sponte action has expired.
3.2 CONFLICTING INSTRUCTIONS. If a controversy arises between
the Parties concerning the release of the ACC Shares hereunder, they shall
notify the Escrow Agent. In that event (or, in the absence of such notification,
if in the good faith judgment of the Escrow Agent such controversy exists), the
Escrow Agent shall not be required to resolve such controversy or take an action
but shall be entitled to await resolution of the controversy by joint
instructions from the Parties. The Escrow Agent may institute an interpleader
action in state or federal court in the State of California to resolve such
controversy. If a suit is commenced against the Escrow Agent, it may answer by
way of interpleader and name ACC and the Shareholders as additional parties to
such action, and the Escrow Agent may tender the ACC Shares into such court for
determination of the respective rights, titles and interests of the Parties.
Upon such tender, the Escrow Agent shall be entitled to receive from the Parties
its reasonable attorneys' fees and expenses incurred in connection with said
interpleader action or in any related action or suit. As between ACC and the
Shareholders, such fees, expenses and other sums shall be paid by the party
which fails to prevail in the proceedings brought to determine the appropriate
distribution of the ACC Shares. If and when the Escrow Agent shall so interplead
such Parties, or either of them, and deliver the ACC Shares to the clerk of such
court, all of its duties hereunder shall cease, and it shall have no further
obligation in this regard. Nothing herein shall prejudice any right or remedy of
the Escrow Agent.
4. CONCERNING ESCROW AGENT
4.1 DUTIES. Escrow Agent undertakes to perform all duties
which are expressly set forth herein; provided, however, that the Escrow Agent
shall not be required to make or be liable in any manner of its failure to make
any determination under the Agreement or any other agreement, including whether
ACC or the Shareholders are entitled to delivery of the ACC Shares under the
Agreement.
4.2 INDEMNIFICATION.
a. Escrow Agent may rely upon and shall be protected in acting
or refraining from acting upon any written notice,
instructions or request furnished to it hereunder and believed
by it to be genuine and authorized.
b. Escrow Agent shall not be liable for any action taken by it
in good faith and without gross negligence or wilful
misconduct, and believed by it to be authorized or within the
rights or powers conferred upon it by this Escrow Agreement,
and 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.
c. ACC and the Shareholders hereby agree to indemnify the
Escrow Agent for, and hold the Escrow Agent harmless against,
any loss, liability or expense incurred without gross
negligence or wilful misconduct or bad faith on the part of
the Escrow Agent, arising out of or in connection with the
Escrow Agent's entering into this Escrow Agreement and
carrying out the Escrow Agent's duties hereunder, including,
without limitation, costs and expenses of defending the Escrow
Agent against any claim or liability with respect thereto.
d. Escrow Agent shall have no implied obligations or
responsibilities hereunder, nor shall it have any obligation
or responsibility to collect funds or seek the deposit of
money or property, nor is the Escrow Agent a party to any
other agreement entered into among ACC and the Shareholders.
4.3 OTHER MATTERS. Escrow Agent (and any successor escrow
agent or agents) reserves the right to resign as the Escrow Agent at any time,
provided fifteen (15) days' prior written notice is given to the other parties
hereto, and provided further that a mutually acceptable successor Escrow
Agent(s) within such fifteen (15) day period, the Escrow Agent may petition any
court in the State of California having jurisdiction to designate a successor
Escrow Agent. The resignation of the Escrow Agent (and any successor escrow
agent or agents) shall be effective only upon delivery of the ACC Shares to the
successor escrow agent(s). The Parties reserve the right to jointly remove the
Escrow Agent at any time, provided fifteen (15) days' prior written notice is
given to the Escrow Agent. In the event of litigation or dispute by the Parties
in which the performance of the duties of the Escrow Agent is at issue, the
Escrow Agent shall take no action until such action is agreed in writing by the
Parties, or until receipt of any order pursuant to 3.1(a)iii or 3.1(b)ii above
directing the Escrow Agent with respect to the action which is the subject of
such litigation or dispute.
5. TERMINATION. This Escrow Agreement shall be terminated upon the
release of the ACC Shares in accordance with the terms and conditions of Section
3 hereof, or otherwise by written mutual consent signed by all parties hereto.
6. NOTICE. All notices, demands, requests, or other communications
which may be or are required to be given, served or sent by any party to any
other party pursuant to this Escrow Agreement shall be in writing and shall be
hand delivered (including delivery by courier), sent by facsimile, or mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
TO ACC:
American Custom Components, Inc.
0000 X. XxxXxxxxx Xxxx.
Xxxxx Xxx, XX 00000
Attn: Xxxxxx Xxxx Walk
Facsimile No.: 000-000-0000
with a copy to:
The Law Offices of M. Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: M. Xxxxxxx Xxxxxx, Esq.
Facsimile No.: 000-000-0000
TO THE SHAREHOLDERS:
Xxxxx Xxxxx
00000 Xxxxx Xxxxxx
Xxx Xxxx Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx, Lassleben & Xxxxxx, LLP
00000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: J. Xxxxxxxx Xxxxxxxxxxx
Facsimile No.: 000-000-0000
TO THE ESCROW AGENT:
MRC Legal Services Corporation
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attn: M. Xxxxxxx Xxxxxx, Esq.
Facsimile (000) 000-0000
or such other address as the addressee may indicate by written notice to the
other parties. Each notice, demand, request or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it delivered to the addressee (with the
return receipt, the delivery receipt or the affidavit of messenger being deemed
conclusive but not exclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
7. BENEFIT AND ASSIGNMENT. This Escrow Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No person or entity other than
the parties hereto is or shall be entitled to bring any action to enforce any
provision in this Escrow Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Escrow Agreement shall be solely for
the benefit of, and shall be enforceable only by, the parties hereto or their
respective successors and assigns this Escrow Agreement or any rights hereunder
without the prior written consent of the parties hereto.
8. ENTIRE AGREEMENT; AMENDMENT. This Escrow Agreement and the Stock
Purchase Agreement executed simultaneously herewith contain the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior oral or written agreements, commitments or understandings with respect to
such matters. This Escrow Agreement may not be changed orally, but only by an
instrument in writing signed by the party against whom enforcement of any
waiver, change, modification, extension or discharge is sought.
9. HEADINGS. The headings of the sections and subsections contained in
this Escrow Agreement are inserted for convenience only and do not form a part
or affect the meaning, construction or scope thereof.
10. GOVERNING LAW; VENUE. This Escrow Agreement shall be governed and
constructed under and in accordance with the laws of the State of California
(but not including the conflicts of laws and rules thereof). For purposes of any
action or proceeding involving this Escrow Agreement each of the parties to this
Escrow Agreement expressly submits to the jurisdiction of the federal and state
courts located in the State of California and consents to the service of any
process or paper by registered mail or by personal service within or without the
State of California in accordance with applicable law, provided a reasonable
time for appearance is allowed.
11. SIGNATURE IN COUNTERPARTS. This Escrow Agreement may be executed in
separate counterparts, none of which need contain the signature of all parties,
each of which shall be deemed to be an original and all of which taken together
constitute one and the same instrument. It shall not be necessary in making
proof of this Escrow Agreement to produce or account for more than the number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.
12. ATTORNEY'S FEES. Should any action be commenced between the parties
to this Agreement concerning the matters set forth in this Agreement or the
right and duties of either in relation thereto, the prevailing party in such
action shall be entitled, in addition to such other relief as may be granted, to
a reasonable sum as and for its Attorney's Fees and Costs.
IN WITNESS WHEREOF, each of the parties has caused this Escrow
Agreement to be duly executed and delivered in its name and on its behalf, all
as of the date and year first above written.
AMERICAN CUSTOM COMPONENTS, INC.
/s/ Xxxxxx Xxxx Walk
--------------------------------
By: Xxxxxx Xxxx Walk
Its: President
K5 PLASTICS, INC.
/s/ Xxxxx Xxxxx
--------------------------------
By: Xxxxx Xxxxx
Its: President
/s/ Xxxxx Xxxxx
-------------------------------- /s/ Xxxxx Xxxxx
XXXXX XXXXX, individually -----------------------------
XXXXX XXXXX, individually
/s/ Xxxxxxxxx X. Xxxxxx
-------------------------------- /s/ Xxxxxxx X. Xxxxx
XXXXXXXXX X. XXXXXX, individually ------------------------------
XXXXXXX X. XXXXX, individually
/s/ Xxxxxxxx Xxxxxxxxx
--------------------------------
XXXXXXXX XXXXXXXXX, individually
"Escrow Agent"
MRC LEGAL SERVICES CORPORATION
/s/ M. Xxxxxxx Xxxxxx
--------------------------------
By: M. Xxxxxxx Xxxxxx
Its: President
