ESCROW AGREEMENT
ESCROW AGREEMENT, dated ___________, 1997, by and among
STANDARD AUTOMOTIVE CORPORATION, a Delaware corporation having an address x/x
Xxxx, Xxxxx, Xxxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("SAC"), AJAX MANUFACTURING COMPANY, a New Jersey corporation with offices at
000 Xxxxxx Xxxx, Xxxxxxxxxxxx Xxxxxxxx, Xxx Xxxxxx 00000-0000 ("Ajax"), XXXX
XXXXXXX, an individual residing at 0000 Xxxxx Xxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx
00000 ("Xxxxxxx") and XXXXXXXX XXXXX XXXXXXXX XXXX & BALLON LLP, having offices
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Escrow Agent").
WITNESSETH:
WHEREAS, SAC and Xxxxxxx have entered into a Stock Purchase
and Redemption Agreement, dated ____________, 1997 (the "Stock Purchase
Agreement") providing for, among other things, the purchase by SAC from Xxxxxxx
of all of the outstanding shares of the common stock of Ajax; and
WHEREAS, the Internal Revenue Service ("IRS") has delivered to
Ajax a notice of proposed adjustment of Ajax's federal excise tax liability for
calendar years 1995 and 1996, together with interest and penalties, in the
amount of One Million Seven Hundred Twenty-One Thousand Nine Hundred Eighteen
($1,721,918) Dollars (the "Excise Claim"); and
WHEREAS, to secure Xxxxxxx'x obligation under Section 12.2.3
of the Stock Purchase Agreement to re-pay to SAC such portion of the Purchase
Price (as defined in the Stock Purchase Agreement) as is equal to any Ajax
liability arising out of the Excise Claim (as described in the first paragraph
of said Section 12.2.3), Xxxxxxx has agreed to deposit One Million Seven Hundred
Twenty-One Thousand Nine Hundred Eighteen ($1,721,918) Dollars in escrow with
the Escrow Agent to be held and paid over as hereinafter provided; and
WHEREAS, Escrow Agent has agreed to serve as escrow agent
pursuant to the terms hereof.
NOW, THEREFORE, it is agreed as follows:
1. Deposit of Funds. Simultaneously with the execution and
delivery of this Escrow Agreement, the sum of One Million Seven Hundred
Twenty-One Thousand Nine Hundred Eighteen ($1,721,918) Dollars has been
deposited in an interest bearing account with the Escrow Agent, or, subject to
the execution and delivery of such releases and other instruments as shall be
satisfactory to Escrow Agent, in such other interest bearing account (to be
maintained in the name of Escrow Agent) as SAC, Xxxxxxx and Ajax may agree upon
and direct. Monies shall be disbursed from the account only in accordance with
the terms hereof. All monies on deposit with the Escrow Agent, inclusive of
interest, are referred to herein as the "Escrow Funds."
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2. Release and Delivery of Funds.
(a) Upon either: (i) Ajax and the IRS having \entered into a
final agreement of settlement as to Ajax's federal excise tax liability in
respect of the Excise Claim; or (ii) if not so settled, the amount of said
liability having been finally determined by a court of competent jurisdiction
which is not subject to further appeal or other appellate review (in either
case, such liability being hereinafter referred to as the "Final Excise
Liability"), then in such event SAC, Xxxxxxx and Ajax jointly shall give to
Escrow Agent prompt written notice of such settlement or determination, together
with a copy of the fully executed settlement agreement or a copy of the
judgment, order or decree embodying such final determination, as the case may
be, such notice to contain the computation (prepared by Ajax's independent
public accountants) of the combined net cash effect to Ajax (if any) of (w) any
federal and/or state tax benefit received by Ajax resulting from Ajax's payment
of the Final Excise Liability, offset by (x) any federal and/or state tax
burdens to Ajax that may result from payments made by Xxxxxxx pursuant to said
Section 12.2.3, for the Ajax tax year in which the Final Excise Liability is
paid (the result of such computation being hereinafter referred to as the "Net
Cash Effect"). Upon receipt of such notice, Escrow Agent promptly shall release
and disburse (y) to SAC such portion of the then total Escrow Funds as is equal
to the Final Excise Liability, less the Net Cash Effect, and (z) to Xxxxxxx the
balance of the
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Escrow Funds remaining after the disbursement described in clause (y) of this
Paragraph 2(a).
(b) If conflicting or adverse claims or demands are made or
served upon the Escrow Agent by, or if litigation is commenced between, any of
SAC, Xxxxxxx or Ajax with respect to the escrow provided for herein, SAC,
Xxxxxxx and Ajax agree that except as otherwise provided in this subparagraph
(b) the Escrow Agent shall refuse to act with regard to the Escrow Funds so long
as such disagreement or litigation shall continue. In so doing, the Escrow Agent
shall not be or become liable for damages, losses, costs, expenses or interest
to any person for its refusal to so act. The Escrow Agent shall continue to so
refrain and refuse to so act until such conflicting claims or demands or
litigation shall have been finally determined by a court of competent
jurisdiction which is not subject to further appeal or other appellate review,
or shall have been settled by agreement of the parties to such controversy, in
which case the Escrow Agent shall be notified thereof in a notice signed by such
parties. The Escrow Agent may also elect to commence an interpleader or other
action for declaratory judgment for the purpose of having the respective rights
of the claimants adjudicated, and may deposit with the court all funds held
hereunder pursuant to this Agreement; and if it so commences and deposits, the
Escrow Agent shall be relieved and discharged from any further duties and
obligations under this Agreement. Whichever of SAC, Xxxxxxx or Ajax is a party
to such dispute or litigation shall equally pay all costs, expenses and
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reasonable attorney's fees and expenses incurred by the Escrow Agent in seeking
any such judgment.
3. Concerning the Escrow Agent. (a) The Escrow Agent shall not
be bound in any way by any agreement or contract between the parties hereto to
which the Escrow Agent is not a party (whether or not the Escrow Agent has
knowledge thereof) and the only duties or responsibilities of the Escrow Agent
shall be to hold and disburse the Escrow Funds in accordance with the terms of
this Escrow Agreement.
(b) The Escrow Agent may accept or act upon any
instructions, directions, documents or instruments purportedly signed or issued
by, or on behalf of, any corporation, partnership, fiduciary or individual; it
shall not be necessary for the Escrow Agent to inquire into their authority. The
Escrow Agent shall not be held liable in any event if it accepts as accurate and
acts in good faith upon the contents of any notice received by it from SAC,
Xxxxxxx and/or Ajax, delivered to it in accordance with the terms of this Escrow
Agreement.
(c) This Agreement may be altered or amended only with
the written consent of all of the parties hereto. The Escrow Agent may resign as
escrow agent at any time by notifying the other parties hereto in writing and,
until a successor escrow agent is appointed by them and accepts such
appointment, the only duty of the Escrow Agent shall be to hold the Escrow Funds
in accordance with the original instructions contained in this Escrow Agreement.
Upon receipt by the Escrow Agent of a written notice from SAC,
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Xxxxxxx and Ajax advising it of the appointment of a successor escrow agent, it
shall deliver the Escrow Funds to such successor.
(d) The Escrow Agent shall not be liable for any exercise
of judgment in the performance of its duties hereunder but only for its own
willful misconduct or gross negligence, and the duties of the Escrow Agent shall
be determined solely by the express provisions of this Escrow Agreement.
(e) The Escrow Agent shall be reimbursed in equal shares
by SAC, Xxxxxxx and Ajax for all out-of-pocket expenses necessarily incurred in
performing its obligations hereunder.
4. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and shall be effective when received
by the addressee, if delivered by hand, or by overnight courier service which
obtains a written receipt of delivery, or three days after deposit in the United
States mails if sent by certified mail, return receipt requested, postage
prepaid, addressed as follows (or, as to any party, addressed to it at such
other address as it shall designate by a written notice to the other parties
complying as to delivery with the terms of this Paragraph):
If to SAC:
Standard Automotive Corporation
x/x Xxxx, Xxxxx, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxx Xxxxxx, Esq.
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If to Xxxxxxx:
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
Attn: Xxxx Xxxxx, Esq.
If to Ajax:
Ajax Manufacturing Company
000 Xxxxxx Xxxx
Xxxxxxxxxxxx Xxxxxxxx
Xxx Xxxxxx 00000-0000
Attn: Xxxx Xxxxxxx
With a copy to:
Standard Automotive Corporation
x/x Xxxx, Xxxxx, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxx Xxxxxx, Esq.
If to Escrow Agent:
Xxxxxxxx Xxxxx Xxxxxxxx Xxxx & Ballon LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Att: Xxxxxxx X. XxXxxx, Esq.
5. General Provisions. (a) This Escrow Agreement shall be
governed by and interpreted in accordance with the laws of the State of New
York.
(b) This Escrow Agreement may be executed in one or more
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same instrument.
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(c) This Escrow Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and may
not be changed or terminated orally, but only by a written instrument signed by
the party against which enforcement of such change or termination is sought.
(d) This Escrow Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
(e) Paragraph headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
(f) The failure of any party, at any time or times
hereafter, to require strict performance of any provision of this Escrow
Agreement shall not waive, affect or diminish any future right of such party to
demand strict compliance therewith. No delay or omission of any party to
exercise any right or power available to it upon the default of any other party
hereto shall be deemed to be a waiver of such right or acquiescence to such
default. No right or remedy granted to any party herein shall be deemed
exclusive and each such remedy shall be cumulative and in addition to any other
remedy given herein or existing at law or in equity.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be duly executed and delivered as of the date first above written.
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STANDARD AUTOMOTIVE CORPORATION
By:___________________________
______________________________
XXXX XXXXXXX
AJAX MANUFACTURING COMPANY
By:___________________________
XXXXXXXX XXXXX XXXXXXXX
XXXX & BALLON LLP
By:___________________________
Xxxxxxx X. XxXxxx, a Partner
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