ESCROW AGREEMENT
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ESCROW AGREEMENT, dated as of May 10, 1999, (the "Agreement"), between
National Auto Credit, Inc., a Delaware corporation (the "Company"), Xxxxxx X.
Xxxxxx XX (the "Investor") and Xxxxxx, Fournaris & Xxxxxxxxxx, P.A., a Delaware
professional corporation, as Escrow Agent (the "Escrow Agent").
WHEREAS, the Investor and the Company are parties to a Letter Agreement
(the "Letter Agreement"), dated as of the date hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Definitions. Terms used without definition herein shall have the
respective meanings ascribed thereto in the Letter Agreement.
2. Appointment of Escrow Agent; Deposit of Shares and Funds in Escrow. The
Company and the Investor hereby appoint the Escrow Agent as the escrow agent
under this Agreement, and the Escrow Agent accepts such appointment according to
the terms and conditions set forth herein. Within two business days of the date
hereof, the Company and the Investor shall have deposited with the Escrow Agent,
and the Escrow Agent hereby acknowledges receipt of, (a) certificates registered
in the name of the Investor (or other entities holding Common Stock beneficially
owned by the Investor) evidencing the Shares (together with appropriate stock
powers duly endorsed in blank or accompanied by other duly executed instruments
of transfer in favor of the Company), which, for the avoidance of doubt,
constitute 2,849,630 shares of Common Stock and (b) funds (the "Funds") in the
amount of $3,274,445, which, for the avoidance of doubt, constitutes the
consideration to be paid by the Company to the Investor upon exercise of the
Option, without giving effect to the making of the Second Payment and the
deduction from such consideration required in connection therewith; provided
that upon the making of the Second Payment (which the Company agrees to give the
Escrow Agent concurrent notice of), the Funds shall be reduced by $250,000 in
accordance with Section 3 hereof. The Escrow Agent shall hold, manage,
administer, distribute and dispose of the Shares and the Funds in accordance
with the terms and conditions of this Agreement. The Escrow Agent shall hold the
Shares and the Funds in the escrow created hereunder in its principal offices in
the City of Wilmington, Delaware; provided that, the Escrow Agent may, at the
instruction and expense of the Company, deposit the Funds in an insured interest
bearing account with a commercial bank located in the State of Delaware with
total capital and surplus in excess of $500 million (it being agreed and
understood that all interest in respect of the Funds shall be credited for the
account of the Company).
3. Release of Shares and Funds From Escrow. The Escrow Agent shall hold the
Shares and the Funds in escrow in accordance with this Agreement and shall
release the Shares and the Funds only as follows:
(a) Upon the exercise of the Option by the Company (or any third-party
which the Company has, in accordance with the Letter Agreement, transferred the
Option to), the Escrow Agent shall release the Shares and the Funds from the
escrow created hereunder and deliver the Shares to the Company (or such
third-party transferee) and deliver the Funds to the Investor. The Company shall
concurrently notify the Escrow Agent of its exercise of the Option.
(b) If the Company has not exercised the Option, upon the expiration
of the Term or in the event of a breach of this Agreement or the Letter
Agreement resulting in a termination of Agreement and the Letter Agreement, the
Escrow Agent shall release the Shares and the Funds from the escrow created
hereunder and deliver the Shares to the Investor and deliver the Funds to the
Company.
(c) Any delivery required to be made hereunder by the Escrow Agent
shall be delivered in accordance with written instructions given to the Escrow
Agent by the party entitled under this Agreement to receive such delivery.
(d) Upon the giving of any notice of the making of any Second Payment
by the Company pursuant to Section 2 hereof, the Escrow Agent shall release
$250,000 of the Funds from the escrow created hereunder and deliver such amount
to the Company.
(e) Upon the release of the Shares and the Funds by the Escrow Agent
in accordance with this Section 3, this Agreement and the escrow created
hereunder shall terminate and the Escrow Agent shall be discharged from all
further obligations hereunder.
4. Conditions to Escrow. The Escrow Agent agrees to hold the Shares and the
Funds and to perform in accordance with the terms and provisions of this
Agreement. The Company and the Investor agree that the Escrow Agent does not
assume any responsibility for the failure of the Company or the Investor to
perform in accordance with the Letter Agreement or this Agreement. The
acceptance by the Escrow Agent of its responsibilities hereunder is subject to
the following terms and conditions, which the parties hereto agree shall govern
and control with respect to the Escrow Agent's rights, duties, liabilities and
immunities:
(a) The Escrow Agent may conclusively rely, and shall be protected in
acting or refraining from acting upon, any written notice, certification,
request, waiver, consent, receipt or other paper or document furnished to it,
not only as to its due execution and validity and effectiveness of its
provisions, but also as to the truth and accuracy of any information therein
contained which the Escrow Agent reasonably believes to be genuine and to have
been executed and presented by the proper party or parties. Should it be
necessary for the Escrow Agent to act upon any instructions, directions,
documents or instruments issued or signed by or on behalf of any corporation,
fiduciary, or individual acting on behalf of another party hereto, it shall not
be necessary for the Escrow Agent to inquire into such corporation's,
fiduciary's or individual's authority, capacity, existence or identity. The
Escrow Agent is also relieved from the necessity of satisfying itself as to the
authority of the persons executing this Agreement in a representative capacity.
It is understood that any references herein to joint instructions or joint
written instructions or words of similar import include any instructions signed
in counterpart.
(b) The Escrow Agent shall not be liable for 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, except for its own gross negligence or willful misconduct.
(c) The Escrow Agent may consult with, and obtain advice from, legal
counsel in the event of any question as to any of the provisions hereof or the
duties hereunder, and it shall incur no liability and shall be fully protected
in acting in good faith in accordance with the opinion and
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instructions of such counsel. The reasonable costs of such counsel's services
shall be paid to the Escrow Agent in accordance with Section 6 below.
(d) The Escrow Agent shall have no duties except those which are
expressly set forth herein and it shall not be bound by (i) the Letter Agreement
or any agreement of the other parties hereto (whether or not it has any
knowledge thereof) or by any notice of a claim, or demand with respect thereto
or (ii) any waiver, modification, amendment, termination or rescission of this
Agreement, in either case unless the Escrow Agent agrees thereto in writing.
(e) The Escrow Agent may resign and be discharged from its duties and
obligations hereunder by giving notice in writing of such resignation specifying
a date (no earlier than 30 days following the date of such notice) when such
resignation will take effect, provided, however, that until a successor escrow
agent is appointed by the Investor and the Company and such successor accepts
such appointment, the Escrow Agent shall continue to hold the Shares and the
Funds and otherwise comply with the terms of this Agreement; and provided
further that the parties to this Escrow Agreement agree to use their best
efforts to mutually agree on a successor escrow agent within 30 days after the
giving of Escrow Agent's notice and if no such successor escrow agent shall be
appointed within 30 days of the Escrow Agent providing its notice, the Escrow
Agent may, at the expense of the Company and the Investor, (i) appoint a
successor escrow agent which shall be a national or state-chartered banking,
trust or savings association or (ii) petition any court of competent
jurisdiction for the appointment of a successor escrow agent. Any successor
escrow agent shall execute and deliver an instrument accepting such appointment
and it shall, without further acts, be vested with all the estates, properties,
rights, powers and duties of the predecessor escrow agent as if originally named
as escrow agent. The resigning Escrow Agent shall thereupon be discharged from
any further obligations under this Escrow Agreement.
(f) Upon delivery of all of the Shares and all of the Funds pursuant
to the terms of Section 3 above or to a successor escrow agent, the Escrow Agent
shall thereafter be discharged from any further obligations hereunder. The
Escrow Agent is hereby authorized, in any and all events, to comply with and
obey any and all final judgments, orders and decrees (not subject to appeal) of
any court of competent jurisdiction which may be filed, entered or issued, and,
if it shall so comply or obey, it shall not be liable to any other person by
reason of such compliance or obedience.
(g) The Escrow Agent shall not have any responsibility or liability
for the completeness, correctness or accuracy of any transactions between the
Investor, on the one hand, and the Company, on the other hand.
(h) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Shares or the Funds which, in its sole opinion, are in conflict with either
other instructions received by it or any provision of this Agreement, it shall
without liability of any kind, be entitled to hold the Shares and the Funds
pending the resolution of such uncertainty to the Escrow Agent's sole
satisfaction, by final judgment of a court or courts of competent jurisdiction
or otherwise.
5. Indemnification. The Company and the Investor, jointly and severally,
hereby agree to indemnify the Escrow Agent, its directors, officers, agents and
employees and any person who "controls" the Escrow Agent within the meaning of
Section 15 of the Securities Act of 1933 (collectively, the "Indemnified
Parties") for and to hold them harmless against any loss, liability or expense
(including, without limitation, all expenses reasonably incurred in its
investigation and defense
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and costs and expenses reasonably incurred in enforcing this right of
indemnification) incurred without gross negligence or willful misconduct on the
part of the Indemnified Parties arising out of or in connection with this
Agreement. The provisions of this Section 5 shall survive the termination of
this Agreement.
6. Escrow Costs; No Right of Set-off. The Escrow Agent shall be entitled to
be paid a fee of $4,500 for its services pursuant to this Agreement and to be
reimbursed for its reasonable costs and expenses hereunder (including reasonable
counsel fees), which fees, costs and expenses shall be paid from time to time by
the Company. Nothing in this Section 6 limits the Escrow Agent's rights against
the Company and the Investor for the payment of amounts due to the Escrow Agent
under Section 5 above or the Escrow Agent's fees, costs and expenses hereunder.
7. Miscellaneous.
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(a) Governing Law; Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflict of laws. The parties agree that the exclusive forum
for all disputes arising out of this Agreement and the transactions contemplated
hereby shall be the state courts of the State of Delaware.
(b) Paragraph and Section Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part of this Agreement.
(c) Notices. All notices and other communications to any party
hereunder shall be in writing (including facsimile or similar writing) and shall
be given:
(i) if to the Company, to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
(ii) if to the Investor, to: with a copy
(which shall not constitute
notice) to:
Xxxxxx X. Xxxxxx XX
0000 X. Xxxxxxxxx Xxxx Xxxxxx X. Xxxxxxx, Esq.
Suite 1150 Xxxxx & Xxxxxx L.L.P.
Xxxxxxx, Xxxxxxx 00000 One Arizona Center
Facsimile: (000) 000-0000 Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
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(iii) if to the Escrow Agent, to:
Xxxxxx, Fournaris & Xxxxxxxxxx, P.A.
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
or such other address or facsimile number as a party may hereafter specify by
like notice to the other parties. Each such notice, request or other
communication shall be effective (i) if given by facsimile, when such facsimile
is transmitted to the facsimile number specified herein and the appropriate
confirmation is provided; (ii) if given via a nationally recognized courier
service marked "Next Day Delivery," one business day following the date of the
delivery to such courier service; (iii) if given via United States mail, five
days after such notice is deposited in the mail in a postage pre-paid envelope;
or (iv) if given by any other means, when delivered at the address specified
herein.
(d) Expenses and Taxes. Each party shall pay its own fees and expenses
incurred in connection with the transactions contemplated hereby.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties.
(f) Entire Agreement; Amendment and Waiver. This Agreement and the
Letter Agreement constitute the entire understanding of the parties hereto and
supersede all prior agreements or understandings with respect to the subject
matter hereof among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived only with the written
consent of the Company and Investor. No course of dealing between the Company
and Investor nor any delay in exercising any rights hereunder shall operate as a
waiver of any rights of either party hereto.
(g) Severability. In the event that any part or parts of this
Agreement shall be held illegal or unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not effect the
remaining provisions of this Agreement which shall remain in full force and
effect.
(h) Specific Performance. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
NATIONAL AUTO CREDIT, INC.
/s/ Xxxxx X. XxXxxxxx
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Name: Xxxxx X. XxXxxxxx
Title: Chairman of the Board
of Directors
/s/ Xxxxxx X. Xxxxxx XX
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XXXXXX X. XXXXXX XX (*)
XXXXXX, FOURNARIS & XXXXXXXXXX, P.A.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Esquire
President
(*) On his own behalf and, for purposes
of delivery of 134,000 shares of Common
Stock, on behalf of Verde Investments,
Inc., as President.
