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EXHIBIT 10.23
ESCROW AGREEMENT
ESCROW AGREEMENT, dated April 3, 1998, by and among The Delicious
Frookie Company, Inc., a Delaware corporation ("Buyer"), Xxxxxxx Foods, L.L.C.,
a Delaware limited liability company ("Seller"), and American National Bank and
Trust Company of Chicago, as escrow agent ("Escrow Agent"). Unless otherwise
defined herein, capitalized terms used herein have the meanings ascribed to them
in the Asset Purchase Agreement, dated April 3, 1998, by and between Buyer and
Seller (the "Purchase Agreement").
W I T N E S S E T H
WHEREAS, pursuant to the Purchase Agreement, Buyer has agreed to pay
into escrow on the Closing Date $250,000 of the Purchase Price, such amount (the
"Escrow Amount") to be distributed by Escrow Agent as provided herein; and
WHEREAS, Buyer and Seller desire to appoint Escrow Agent as escrow
agent for purposes of holding, investing and distributing the Escrow Amount, and
Escrow Agent is willing to serve as escrow agent, subject to all of the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and in the Purchase Agreement, the parties hereto agree as follows:
1. Appointment of Escrow Agent. Buyer and Seller hereby appoint
Escrow Agent to receive, hold, invest and distribute the Escrow Amount, and any
interest earned thereon (collectively with the Escrow Amount, the "Escrow
Property"), and Escrow Agent accepts such appointment, all subject to the terms
and conditions of this Escrow Agreement.
2. Deposit of Escrow Amount. On the date hereof, Buyer has deposited
with Escrow Agent by bank wire transfer the Escrow Amount.
3. Investment of Escrow Property.
(a) The Escrow Agent shall act as custodian of the Escrow
Property and shall from time to time invest and reinvest the Escrow Property and
other proceeds in any one or more of the following investments as Seller may
from time to time elect by notice in writing to the Escrow Agent.
(1) Any U.S. Government or U.S. Government Agency
security:
(2) Any commercial paper rated A1/P1 or better;
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(3) Any certificate of deposit or time deposit in any
bank with a long-term debt rating of A or better
from Moody's or Standard & Poor's; or
(4) Any commercial bank Money Market Deposit Account.
The Escrow Agent shall have the power to sell or liquidate the
foregoing investments whenever the Escrow Agent shall be required to release the
Escrow Property pursuant to Section 4. The Escrow Agent shall have no
responsibility for any investment losses resulting from the investment,
reinvestment or liquidation of the Escrow Property in accordance with this
Escrow Agreement.
(b) Any interest or other income received on such investment
and reinvestment of the Escrow Property shall become part of the Escrow
Property.
4. Payment of Escrow Property. The Escrow Property shall be paid as
follows:
(a) Upon receipt by Escrow Agent of a notice (a "Notice")
signed on behalf of Buyer or Seller certifying the amount of the Working Capital
Adjustment and stating that all disputes, if any, regarding the Working Capital
Adjustment have been finally reconciled in accordance with the provisions of
Section 2.2 of the Purchase Agreement, Escrow Agent shall promptly deliver a
copy of such notice to the other party (the "Other Party"). The party that gives
a Notice to the Escrow Agent shall simultaneously send the Other Party a copy of
such Notice. Unless Escrow Agent receives a written objection (an "Objection
Notice") from the Other Party within ten (10) business days after such delivery,
the Escrow Agent shall (i), if the Working Capital Adjustment is negative, (A)
pay the amount of the Working Capital Adjustment (as certified in the Notice)
out of the Escrow Property, after giving effect to any offset for any payment
under Section 2.4 of the Purchase Agreement (as certified in the Notice), to
Buyer by bank or certified check or wire transfer of immediately available funds
in accordance with Buyer's written instructions and (B) pay the balance, if any,
of the Escrow Property to Seller by certified check or wire transfer of
immediately available funds in accordance with Seller's written instructions; or
(ii), if the Working Capital Adjustment (as certified in the Notice) is
positive, all of the Escrow Property shall be paid to Seller by bank or
certified check or wire transfer of immediately available funds in accordance
with Seller's written instructions.
(b) In the absence of receipt of a Notice, or in the event
Escrow Agent receives an Objection Notice, Escrow Agent shall not make any
payment of the Escrow Property unless (i) both Buyer and Seller instruct it in
writing to make such payment or (ii) it receives a certified copy of a final
order, not subject to appeal, from a court of competent Jurisdiction to make
such payment.
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5. Expenses; Rights and Responsibilities of Escrow Agent
(a) The Escrow Agent shall not be under any duty to give the
Escrow Property held by it hereunder any greater degree of care than it gives
its own similar property and shall not be required to invest any funds held
hereunder except as directed in this Escrow Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.
(b) This Escrow Agreement expressly sets forth all the duties
of the Escrow Agent with respect to any and all matters pertinent hereto. No
implied duties or obligations shall be read into this Escrow Agreement against
the Escrow Agent. The Escrow Agent shall not be bound by the provisions of or
deemed to be a party to any agreement among the other parties hereto, including
without limitation the Purchase Agreement, except this Escrow Agreement.
(c) The Escrow Agent shall not be liable, except for its own
gross negligence or willful misconduct and, except with respect to claims based
upon such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless the Escrow Agent (and any successor Escrow Agent)
from and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees and disbursements, arising out of
and in connection with this Escrow Agreement. Without limiting the foregoing,
the Escrow Agent shall in no event be liable in connection with its investment
or reinvestment of any cash held by it hereunder in good faith, in accordance
with the terms hereof, including without limitation any liability for any delays
(not resulting from its gross negligence or willful misconduct) in the
investment or reinvestment of the Escrow Property, or any loss of interest
incident to any such delays.
(d) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity or the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so.
(e) The Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Escrow Agreement and shall not be
liable for any action taken or omitted in accordance with such advice. If the
Escrow Agent becomes involved in litigation on account of this Escrow Agreement,
it shall have the right to retain counsel and shall have a lien on the property
deposited hereunder for any and all costs, reasonable attorneys' fees, charges,
disbursements, and reasonable and accountable expenses in connection with such
litigation; and upon notice to the other parties hereto together with all
supporting documents therefor, Escrow Agent shall be entitled to reimburse
itself therefor out of the property deposited hereunder, and if it shall be
unable to reimburse itself from the property deposited hereunder, the parties
hereto jointly
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and severally agree to pay to the Escrow Agent on demand its reasonable charges,
counsel and attorneys' fees, disbursements, and expenses in connection with such
litigation.
(f) Except as described in clause (l) below, the Escrow Agent
does not have any interest in the Escrow Property deposited hereunder but is
serving as escrow holder only and having only possession thereof. Buyer and
Seller shall jointly pay or reimburse the Escrow Agent upon request for any
transfer taxes or other taxes relating to the Escrow Property incurred in
connection herewith and shall indemnify and hold harmless the Escrow Agent from
any amounts that it is obligated to pay in the way of such taxes. Any payments
of income from this Escrow Account shall be subject to withholding regulations
then in force with respect to United Sates taxes. The parties hereto will
provide the Escrow Agent with appropriate W-9 forms for tax I.D. or W-8 forms
for non-resident alien certifications. It is understood that the Escrow Agent
shall be responsible for income reporting only with respect to income earned on
investment of funds which are a part of the Escrow Property and is not
responsible for any other reporting. This paragraph and paragraph (c) shall
survive notwithstanding any termination of this Escrow Agreement or the
resignation of the Escrow Agent.
(g) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectability of any security or other
document or instrument held by or delivered to it.
(h) The Escrow Agent shall not be called upon to advise any
party as to the wisdom in selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
(i) The Escrow Agent (and any successor Escrow Agent) may at
any time resign as such by delivering the Escrow Property to any successor
Escrow Agent jointly designated by the other parties hereto in writing, or to
any court of competent jurisdiction, where upon the Escrow Agent shall be
discharged of and from any and all further obligations arising in connection
with this Escrow Agreement. The resignation of the Escrow Agent will take effect
on the earlier of (a) the appointment of a successor (including a court of
competent jurisdiction) or (b) the day which is 30 days after the date of
delivery of its written notice of resignation to the other parties hereto. If at
that time the Escrow Agent has not received a designation of a successor Escrow
Agent, the Escrow Agent's sole responsibility after that time shall be to
safekeep the Escrow Property until receipt of a designation of successor Escrow
Agent or a joint written disposition instruction by the other parties hereto or
a final, non-appealable order of a court of competent jurisdiction.
(j) The Escrow Agent shall have no responsibility for the
contents of any writing of the arbitrators or any third party contemplated
herein as a means to resolve disputes and may rely without any liability upon
the contents thereof.
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(k) In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with the
Escrow Property, or in the event that the Escrow Agent in good faith is in doubt
as to what action it should take hereunder, the Escrow Agent shall be entitled
to retain the Escrow Property until the Escrow Agent shall have received (i) a
final, non-appealable order of a court of competent jurisdiction directing
delivery of the Escrow Property or (ii) a written agreement executed by the
other parties hereto directing delivery of the Escrow Property, in which event
the Escrow Agent shall disburse the Escrow Property in accordance with such
order or agreement. Any court order shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to the Escrow Agent to the effect
that said court order is final and non-appealable. The Escrow Agent shall act on
such court order and legal opinions without further question.
(l) Buyer and Seller, jointly and severally, agree to
reimburse the Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder (including reasonable fees and expenses). The Escrow Agent's fee for
this account is $2,000. Any fees or expenses of the Escrow Agent or its counsel
which are not paid as provided for herein may be taken from any Escrow Property
held by the Escrow Agent hereunder.
(m) In the event that any Escrow Property shall be attached,
garnished, or levied upon by any final, non-appealable court order, or the
delivery thereof shall be stayed or enjoined by a final, non-appealable order of
a court, or any final, non-appealable order, judgment or decree shall be made or
entered by any final, non-appealable court order affecting the property
deposited under this Escrow Agreement, or any part thereof, the Escrow Agent is
hereby expressly authorized, in its sole discretion, to obey and comply with all
writs, orders or decrees so entered or issued, which it is advised by legal
counsel of its own choosing is binding upon it, whether with or without
jurisdiction, and in the event that the Escrow Agent obeys or complies with any
such writ, order or decree it shall not be liable to any of the parties hereto
or to any other person, firm or corporation, by reason of such compliance.
6. Notices. All notices, requests, demands and other communications
which are required or may be given under this Escrow Agreement shall be in
writing and shall be deemed to have been duly given when (i) delivered
personally or by facsimile transmission (and a copy is mailed by regular mail
within 24 hours of such transmission), in either case with receipt acknowledged,
(ii) three business days after being sent by registered or certified mail,
return receipt requested, or (iii) one business day after being sent by prepaid
overnight carrier, with a record of receipt, to the parties at the following
addresses:
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If to Buyer to:
The Delicious Frookie Company, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to Seller to:
Xxxxxxx Foods, L.L.C.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxx, Jr.
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
If to Escrow Agent to:
American National Bank and Trust Company of Chicago
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Corporate Trust, Xxxxx Xxxxxxxxxxx
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or to such other address as the person to whom a communication is to be given
may have furnished to the others in writing in accordance herewith.
7. Arbitration.
(a) Except as otherwise provided in this Agreement, each of
the parties hereto hereby irrevocably consents to arbitration of any dispute,
controversy or claim arising out of or relating to this Agreement. Each of the
parties hereto hereby irrevocably waives, to the fullest extent legally
possible, any objection to the use of arbitration to resolve any such dispute,
controversy or claim. If the parties in good faith cannot resolve any
controversy or claim arising out of or related to this Agreement or in
connection with a breach thereof within 20 days after the claimant gives written
notice of such controversy or claim to the other party, any party may demand and
commence arbitration of the controversy or claim. In the event of a demand for
arbitration, Seller shall select one arbitrator and Buyer shall select one
arbitrator, within 30 days after such demand shall have been given (the "Demand
Date"), and the two arbitrators, within 45 days thereafter, shall select a third
arbitrator. If the third arbitrator shall not be selected within 45 days after
the Demand Date, either Seller, on the one hand, or Buyer, on the other hand,
may apply to the American Arbitration Association (or any successor thereto) for
the appointment of an arbitrator in Chicago, Illinois, and the parties shall be
bound by the appointments made by such Association. The arbitration shall be
held in Chicago, Illinois, as promptly as practicable thereafter under the rules
of the American Arbitration Association in effect at the time such controversy,
claim or breach is submitted to arbitration. The award or decision made in
accordance with such rules shall be delivered in writing to the parties hereto
and shall be final, binding and conclusive upon them in the absence of fraud and
judgment upon such award or decision may be entered in any court having
jurisdiction thereof. Seller, on the one hand, and Buyer, on the other hand,
shall bear equally the cost of such arbitration.
(b) Notwithstanding the provisions of Section 7(a), the
parties hereto shall have the right to seek and obtain from a court of competent
jurisdiction a temporary restraining order, injunction, specific performance or
other equitable relief to enforce the provisions of this Agreement.
8. Miscellaneous.
(a) This Escrow Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, without regard to
conflicts of laws, rules of such state.
(b) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
This Escrow Agreement shall be assignable by Escrow Agent only in accordance
with Section 5(i). Buyer and Seller may assign its rights or obligations under
this Escrow Agreement only upon the prior written consent of the other parties
hereto.
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(c) Section headings contained in this Escrow have been
inserted for reference purposes only, and shall not be construed as part of this
Escrow Agreement.
(d) No printed or other matter in any language (including
without limitation prospectuses, notices, reports and promotional material)
which mentions the Escrow Agent's name or the rights, powers, or duties of the
Escrow Agent shall be issued by the other parties hereto or on such parties'
behalf unless the Escrow Agent shall first have given its specific written
consent thereto.
(e) The Purchase Agreement and this Escrow Agreement together
contain the entire agreement of the parties with respect to the matters set
forth herein; provided, however, that Escrow Agent assumes no liabilities or
obligations except those expressed in this Escrow Agreement and that as between
Escrow Agent and the other parties hereto, this Escrow Agreement contains the
entire agreement of the parties with respect to the matters set forth herein.
(f) This Escrow Agreement shall not be modified, revoked or
terminated except upon the mutual consent of the parties hereto given in writing
and delivered to Escrow Agent.
(g) The other parties hereto authorize the Escrow Agent, for
any securities held hereunder, to use the services of any United States central
securities depository it deems appropriate, including, but not limited to, the
Depositary Trust Company and the Federal Reserve Book Entry System.
(h) This Escrow Agreement may be executed in one or more
counterparts, but all such counterparts shall constitute one and the same
agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed and delivered on the date first above written.
Buyer:
The Delicious Frookie Company, Inc.
By: /s/ Xxxxxxx Xxxxx
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Name: XXXXXXX XXXXX
Title: PRESIDENT
Seller:
Xxxxxxx Foods, L.L.C.
By: /s/ Xxxxxx X. Xxxx
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Name: XXXXXX X. XXXX
Title: MANAGING MEMBER
Escrow Agent:
American National Bank and Trust Company
of Chicago, as Escrow Agent
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Name: XXXXX X. XXXXXXXXXXX
Title: Vice President
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