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Exhibit 10.44
ESCROW AGREEMENT
June 3, 1996
Corporate Stock Transfer, Inc.
Republic Plaza
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxx
Ladies and Gentlemen:
Reference is hereby made to that certain Stock Purchase
Agreement, dated as of May 28, 1996 (the "Purchase Agreement"), by and among
Reddi Brake Supply Corporation, a Nevada corporation ("Reddi Brake"), Xxxxx X.
Xxxxxxx and Xxxxx Xxxxxxx. Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to such terms in the Purchase
Agreement.
You are hereby appointed "Escrow Agent" with the duties and
upon the terms and conditions hereinafter set forth.
1. Deposit of Shares into Escrow. Concurrently
herewith, Reddi Brake has instructed you to issue Seventy-Six Thousand Six
Hundred Eighty-Seven (76,687) shares of Reddi Brake Common Stock (collectively,
the "Shares"), having a current market value of $125,000, to Xxxxx X. Xxxxxxx
(the "Shareholder") as part of the "Purchase Price" under the Purchase
Agreement. Such Shares, and the Stock Certificates representing them, shall be
deposited by you in a segregated trust account (the "Escrow Account").
Shareholder shall concurrently deliver to you a stock power, endorsed in blank
with his signature guaranteed by a Medallian bank; Shareholder further agrees
to deliver such further stock powers, so endorsed, as may from time to time be
necessary to accomplish (a) the adjustment specified in Section 3 hereof or (b)
any distributions under Section 4 hereof. You shall hold all Shares in the
Escrow Account in accordance with these instructions.
2. Term of Escrow. The term of the Escrow (the "Escrow
Period") shall commence on the date hereof and shall terminate on the one year
anniversary of the earlier of (a) the closing date of that certain Purchase and
Sale Agreement by and between Reddi Brake and Shareholder for Reddi Brake's
purchase of Shareholder's stock in Express Undercar Parts Warehouse, Inc., a
California corporation, which date shall be reported to you by Reddi Brake not
later than thirty (30) days after such closing, and (b) June 30, 1996;
provided, however, that, pursuant to Paragraph 12.2 of the Purchase Agreement,
if any Claimed Loss which has been asserted by Purchaser is pending or
unresolved at the end of the Escrow Period, then Reddi
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Brake shall notify you in writing, not later than one day prior to the end of
the Escrow Period, that the specified number of Shares subject to such Claimed
Loss shall remain in the Escrow Account, and the Escrow Period shall be
extended until the matter relating to such Claimed Loss has been terminated or
otherwise resolved.
3. Adjustment to Number of Shares. Pursuant to
Paragraph 12.1 of the Purchase Agreement, effective December 3, 1996, the
number of Shares deposited into the Escrow Account shall be adjusted so that
the market value of the Shares then held in the Escrow Account (based on the
average closing and bid prices on such date, as reported by The NASDAQ Stock
Market or, if Reddi Brake's Common Stock is no longer reported thereon, the
then-relevant market or system) equals $125,000; provided, however, that any
number of Shares subject to a Claimed Loss asserted by Purchaser prior to such
date shall not be so adjusted. If on such date additional Shares must be
deposited into the Escrow Account in order to bring the market value of the
Shares up to $125,000, Shareholder shall deliver to you stock certificates
representing the requisite number of additional Shares of Reddi Brake Common
Stock, which Shares shall be held in the Escrow Account in accordance with
these instructions. If on such date Shares must be released from the Escrow
Account in order to bring the market value of the Shares down to $125,000
(subject to the proviso at the end of the first sentence of this Section 3),
promptly following a written certificate executed by Reddi Brake and
Shareholder in the form attached hereto as Exhibit A, you shall deliver to
Shareholder the number of Shares indicated therein from the Escrow Account.
4. Instructions to Escrow Agent. Escrow Agent shall
hold the Shares subject to the following provisions:
4.1 Distribution Pursuant to Purchase Agreement.
Pursuant to Paragraph 12.2 of the Purchase Agreement, if Sellers acknowledge
their obligation for a Claimed Loss, Reddi Brake may promptly withdraw from the
Escrow Account a number of Shares equal to the sum arrived at by dividing (a)
the amount of the Claimed Loss by (b) the "Relevant Value" of the Shares. For
this purpose, the "Relevant Value" of the Shares shall be (a) with respect to
any Claimed Loss for which Purchaser has given notice to Sellers by December 3,
1996, $1.63, or (b) with respect to any Claimed Loss for which Purchaser has
given Sellers notice on or after December 3, 1996, the average between the
closing offer and bid prices on such date (as reported on The NASDAQ Stock
Market or, if Reddi Brake's Common Stock is no longer reported thereon, the
then-relevant market or system). In connection therewith, promptly follow
receipt of a written certificate executed by Reddi Brake and Sellers in the
form attached hereto as Exhibit B, you shall deliver to Reddi Brake, for
cancellation or to be held as treasury shares, at the sole option and direction
of Reddi Brake, the number of Shares indicated therein from the Escrow Account.
4.2 Distribution Pursuant to Arbitration.
Pursuant to Paragraphs 12.2 and 12.3 of the Purchase Agreement, if Sellers deny
such obligation for a Claimed Loss, Sellers and Purchaser shall proceed to
arbitration, with a determination of whether a Loss exists to be made by a
three-person panel of arbitrators designated according to the rules of the
American
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Arbitration Association. Upon Reddi Brake's delivering to you a written
determination by such panel of arbitrators that Reddi Brake is entitled to
Shares from the Escrow Account, you shall deliver to Reddi Brake, for
cancellation or holding as treasury shares, at the sole option and direction of
Reddi Brake, the number of Shares indicated therein from the Escrow Account.
4.3 Distribution Following Termination. Promptly
after termination of this Escrow pursuant to Section 2 and without any demand
by Shareholder, you shall deliver to Shareholder all of the Shares then held in
the Escrow Account; provided, however, that with respect to any Claimed Loss
which has been asserted that is pending or unresolved at the end of the Escrow
Period, you shall continue to hold in the Escrow Account the number of Shares
subject to such Claimed Loss and the Escrow Period shall be extended until the
matter relating to such Claimed Loss has been terminated or otherwise resolved.
5. Escrow Agent's Duties.
5.1 Nature of Duties. You hereby undertake to
perform only such duties as are expressly set forth herein. You shall have no
obligation to determine the sufficiency of any written certificate delivered
pursuant to Sections 3 or 4 hereof except to determine that the form thereof
conforms to the form attached hereto as Exhibit A or Exhibit B, as the case may
be.
5.2 Custody of Shares. You shall use reasonable
care in the custody of any Shares or other property delivered to you, and in no
event shall you maintain such Shares and property in a less secure manner than
you maintain property similar in nature for your other trust or escrow customer
accounts. In no event shall any Shares be used by you to offset against any
amounts due you, whether pursuant to Section 7 or 8 hereof or otherwise.
5.3 Maintenance of Ledgers; Reports Regarding
Escrow Account. You shall keep and maintain complete and accurate stock
ledgers showing all Shares held in and distributed from the Escrow Account.
Promptly, but in no event later than twenty (20) days following a distribution
pursuant to Sections 3 or 4 hereof, you shall deliver to Reddi Brake and
Shareholder a statement specifying the number of Shares then held in the Escrow
Account.
6. Understanding. It is understood and agreed that you:
(a) are not a party to, and are not bound by, any
agreement referred to herein other than as Escrow Agent, and are not bound by
any agreement among the other parties hereto or their respective heirs,
administrators, successors or assigns, other than as specifically set forth
herein;
(b) are acting hereunder as an escrow agent only
and are not responsible or liable in any manner whatever for the sufficiency,
correctness, genuineness or validity of any instrument deposited with you, or
for the form of execution of any such instrument, or for the identity,
authority or rights of any person executing or deposing it;
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(c) shall be protected in acting upon any written
notice, request, waiver, consent, receipt or other paper or document reasonably
believed by you to be genuine and to have been made, signed, sent or presented
by the proper party or parties;
(d) shall not be liable for any error of
judgment, or for any act done or omitted by you in good faith, or for any
mistake of fact or law or for anything which you may do or refrain from doing
in connection herewith, except your own negligence or willful misconduct;
(e) shall not be required to make any
distribution under Sections 3 or 4 hereof or take any other action required
hereunder if such action has been enjoined by a court of competent jurisdiction
(as determined by you as set forth in clause (f) below);
(f) may consult with your own legal counsel in
the event of any dispute or question as to the construction of any of the
provisions hereof or your duties hereunder and shall incur no liability and
shall be fully protected in acting in accordance with the opinion and
instructions of any such counsel; and
(g) shall not, by act, delay, omission or
otherwise, be deemed to have waived any rights or remedies, or both, hereunder
unless such waiver is in writing, and no waiver shall be valid unless in
writing, signed by you, and only to the extent therein set forth, and a waiver
by you of any right or remedy, or both, granted to you hereunder on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy, or both, which you would otherwise have had on any future occasion.
7. Compensation and Indemnity. You shall receive as
compensation for the performance of your duties the fees set forth on Exhibit C
hereto. Such compensation shall be split equally between Reddi Brake and
Shareholder. Reddi Brake and Shareholder each agree to hold harmless and
indemnify you and your directors, officers, employees and agents for any cost
or expense, including attorneys' fees, arising out of or relating to the Escrow
Account or the performance of your duties hereunder; provided, however, that no
indemnification will be made for any act of willful misconduct or negligence by
you. The covenants contained in Sections 7 and 8 hereunder shall continue
after your resignation or removal or the distribution of all Shares held
hereunder.
8. Expenses. All out-of-pocket expenses reasonably
incurred by you in connection with the performance of your duties as such
hereunder shall be split equally between Reddi Brake and Shareholder. Such
expenses shall be reimbursed upon written request therefor by you to Reddi
Brake and Shareholder specifying in detail the nature of such expenses.
9. Termination and Resignation of Escrow Agent. You may
be removed at any time for any reason upon delivery to you of a written notice
jointly executed by Reddi Brake and Shareholder. You may at any time resign by
giving written notice of such resignation to Reddi Brake and Shareholder. Upon
receiving such notice of resignation or upon your removal,
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Reddi Brake and Shareholder shall promptly appoint a successor Escrow Agent by
an instrument in writing.
Any removal or resignation of you and appointment of a
successor Escrow Agent shall not become effective until acceptance of
appointment by the successor Escrow Agent. If no successor Escrow Agent shall
have been appointed and have accepted appointment within thirty (30) days of
giving notice of removal or notice of resignation as aforesaid, you, Reddi
Brake or Shareholder may petition any court of competent jurisdiction for the
appointment of a successor Escrow Agent, and such court may thereupon, after
such notice (if any) as it may deem proper, appoint such successor Escrow
Agent. Any successor Escrow Agent appointed hereunder shall signify its
acceptance of such appointment by executing and delivering to Reddi Brake,
Shareholder and you a written acceptance thereof, and thereupon such successor
Escrow Agent, without any further act, shall succeed to all of your estates,
properties, rights, powers, trusts, duties and obligations hereunder, with like
effect as if originally named Escrow Agent herein; but, nevertheless, at the
written request of Reddi Brake, Shareholder or the successor Escrow Agent, you
shall execute and deliver any and all instruments of conveyance or further
assurance and do such other things as may reasonably be required for more fully
and certainly vesting in and confirming to such successor Escrow Agent all of
your right, title and interest in and to any property held by you hereunder and
shall pay over, transfer, assign and deliver to the successor Escrow Agent
hereunder any Shares or other property subject to the terms and conditions
herein set forth. Upon the request of the successor Escrow Agent, Reddi Brake
and Shareholder shall execute and deliver any and all instruments as may be
reasonably required for more fully and certainly vesting in and confirming to
such successor Escrow Agent all such monies, estates, properties, rights,
powers, trusts, duties and obligations.
10. Rights of Shares Subject to Escrow.
10.1 Voting Rights. Shareholder shall be entitled
to exercise any and all voting rights pertaining to the Shares held of record
by Shareholder for any purpose not prohibited by the terms of this Agreement or
the Purchase Agreement. You and Reddi Brake shall execute and deliver (or
cause to be executed and delivered) to Shareholder all proxies and other
instruments as Shareholder may reasonably request for the purpose of enabling
Shareholder to exercise the voting rights pertaining to the Shares.
10.2 Economic Rights. Shareholder shall not be
entitled to receipt of any dividends paid on or distributions in liquidation
made with respect to the Shares (collectively, "Distributions") for the period
that such Shares are subject to this Escrow. Any and all monies representing
Distributions received by you in respect of Shares subject to this Escrow shall
be the property of Reddi Brake and shall be paid over promptly to Reddi Brake.
11. Notices. Whenever notice is required or permitted by
this Escrow Agreement to be given, such notice shall be in writing (including
telecopy or similar writing) and shall be given to the following persons at the
addresses and telecopy numbers indicated below, or at such other addresses or
telecopy numbers as such persons may specify from time to time
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by written notice to the Escrow Agent. Any party hereto shall be entitled to
change the names, addresses or telephone or telecopier numbers for any person
to whom copies of any notice to such person are to be addressed by written
notice to the other persons hereto in accordance with the terms and provisions
of this Section 11. Each such notice shall be effective (a) if given by telex
or telecopy, upon receipt, if confirmed by return telecopy, telex or telephonic
confirmation or otherwise, or (b) if given by mail or any other means, when
delivered to the address of such person specified as aforesaid; provided,
however, that no notice to a person shall be deemed received on a day that is
not a Business Day in the jurisdiction in which notices are to be addressed to
such person. Any such notice shall not be effective until the next Business
Day in such jurisdiction. "Business Day" shall mean any day which is not a
Saturday, Sunday or other day on which banks in Los Angeles, California are
authorized or obligated to close.
(i) If to Reddi Brake:
Reddi Brake Supply Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: S. Xxxxxx Xxxxx
Chief Financial Officer
with a copy to:
Xxxxxxx X. Xxxx, Esq.
Xxxxx, Xxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) If to Shareholder to:
Xxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxxxxx, Xxxxxxxx & Pines
0000 Xxxxxxx Xxxx Xxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
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(iii) If to you, to:
Corporate Stock Transfer, Inc.
Republic Plaza
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx Xxxx
12. Survival. This Escrow Agreement shall be binding
upon the parties hereto and upon their respective successors in interest and
assigns.
13. Headings. Headings in this Escrow Agreement are for
reference purposes only and shall not be deemed to have any substantive effect.
14. Governing Law. This Escrow Agreement shall be
construed and enforced in accordance with the substantive laws of the State of
California, without regard to the choice of law provisions thereof.
15. Amendments. The terms and provisions of this Escrow
Agreement may be amended or waived only by a written instrument executed by
you, Reddi Brake and Shareholder.
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16. Counterparts. 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 document.
Very truly yours,
REDDI BRAKE SUPPLY
By:
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S. Xxxxxx Xxxxx
Chief Financial Officer
SHAREHOLDER
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Xxxxx X. Xxxxxxx
The foregoing is accepted and
agreed to as of ________________, 1996
CORPORATE STOCK TRANSFER, INC.
By:
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Xxxxxxx Xxxx, President
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EXHIBIT A
FORM OF CERTIFICATE
Pursuant to Section 3 of that certain Escrow Agreement, dated
June 3, 1996 (the "Escrow Agreement"), by and among Reddi Brake Supply
Corporation, a Nevada corporation ("Reddi Brake"), Xxxxx X. Xxxxxxx and
Corporate Stock Transfer, Inc., as Escrow Agent, the undersigned do hereby
request the distribution to Xxxxx X. Xxxxxxx (the "Shareholder") of
______________ shares of the Common Stock, par value $.0001 per share, issued
in the name of such Shareholder (the "Released Shares") and do hereby certify
as follows:
(i) This certificate is being furnished in
conformity with the terms of Section 3 of the Escrow Agreement; and
(ii) The Shareholder is entitled to receipt of the
Released Shares pursuant to the provisions of Section 12.1 of that certain
Stock Purchase Agreement, dated as of May 28, 1996, among Reddi Brake, Xxxxx X.
Xxxxxxx and Xxxxx Xxxxxxx.
REDDI BRAKE SUPPLY CORPORATION
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
----------------------------------------
Xxxxx X. Xxxxxxx
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EXHIBIT B
FORM OF CERTIFICATE
Pursuant to Section 4.1 of that certain Escrow Agreement,
dated June 3, 1996 (the "Escrow Agreement"), by and among Reddi Brake Supply
Corporation, a Nevada corporation ("Reddi Brake"), Xxxxx X. Xxxxxxx and
Corporate Stock Transfer, Inc., as Escrow Agent, the undersigned do hereby
request the distribution to Reddi Brake, for [cancellation or holding as
treasury shares], of ______________ shares of Reddi Brake Common Stock, par
value $.0001 per share, issued in the name of Xxxxx X. Xxxxxxx (the "Released
Shares") and do hereby certify as follows:
(i) This certificate is being furnished in
conformity with the terms of Section 4.1 of the Escrow Agreement; and
(ii) Reddi Brake is entitled to receipt of the
Released Shares pursuant to the provisions of Section 12.2 of that certain
Stock Purchase Agreement, dated as of May 28, 1996, among Reddi Brake, Xxxxx X.
Xxxxxxx and Xxxxx Xxxxxxx.
REDDI BRAKE SUPPLY CORPORATION
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SELLERS
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Xxxxx X. Xxxxxxx
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Xxxxx Xxxxxxx
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EXHIBIT C
ESCROW AGENT FEE SCHEDULE
ANNUAL ESCROW AGENT FEE, per one-year period or
portion thereof $500.00
Out-of-pocket expenses, including any
safekeeping charges, will be charged at the
actual cost thereof, including counsel fees
and expenses, if necessary. If the Escrow
Agent is required to assume duties or
responsibilities not included in the
schedule, additional reasonable fees will be
assessed based upon the nature of the
services and the responsibility involved.
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