EXHIBIT 2.3
ESCROW AGREEMENT
AGREEMENT (this "Agreement") dated as of April 26, 2002, by and among U.S.
Industries, Inc., a Delaware corporation ("Parent" or "USI"), JUSI Holdings,
Inc., a Delaware corporation and a wholly-owned subsidiary of Parent ("US
Seller"), Xxxxxxx Incorporated, a Connecticut corporation ("Buyer") and The
Bank of New York, as escrow agent (the "Escrow Agent").
WITNESSETH:
WHEREAS, Buyer, US Seller, USI Canada Inc. and Parent have entered into
that certain Stock and Asset Purchase Agreement, dated March 19, 2002 as
amended by Amendment No. 1 to Stock and Asset Purchase Agreement dated as of
April 26, 2002 by and between US Seller and Buyer (the "Purchase Agreement").
WHEREAS, this Escrow Agreement is entered into to create a fund for the
benefit of Buyer for the purpose of securing Remedial Action obligations
associated with the Special Pre-Closing Environmental Liabilities pursuant to
Section 10.03 of the Purchase Agreement.
WHEREAS, The Bank of New York desires to serve as the Escrow Agent and to
hold the escrowed funds upon the terms and conditions set forth herein.
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and agreements herein contained, and the agreements and covenants
contained in the Purchase Agreement, the parties hereby agree as follows:
Section 1. Establishment of Escrow Funds.
(a) Simultaneously with the execution and delivery hereof, Buyer has
delivered by wire transfer of immediately available funds to the Escrow Agent
the sum of $5,000,000 (the "Escrow Funds").
(b) The Escrow Agent shall act as custodian of the Escrow Funds and shall
invest and reinvest the Escrow Funds as directed in writing from time to time
by Buyer and Parent (on behalf of itself and US Seller) only in: (i)
readily-marketable direct obligations of, or repurchase agreements
collateralized by direct obligations of, the United States Government or backed
by the full faith and credit of the United States Government; or (ii)
certificates of deposit, time deposits, money market accounts or other
interest-bearing deposits of commercial banks having total capital and surplus
of at least $250,000,000. The Escrow Agent shall have no responsibility for
determining such obligations and shall have no liability whatsoever for any
investment losses resulting from the investment or reinvestment of the Escrow
Funds, except as a result of (x) a breach of this Escrow Agreement or (y) gross
negligence, bad faith or willful misconduct by the Escrow Agent.
(c) In accordance with the provisions of Section 2.1, any interest or
other income received on such investment and reinvestment of the Escrow Funds
shall be held as part of the Escrow Funds and may be used to satisfy Buyer's
claims for Damages incurred or suffered by Buyer in connection with Special
Pre-Closing Environmental Conditions pursuant to Section 10.03 of the Purchase
Agreement (the "Escrow Claims"). To the extent not so used, such interest and
income shall be disbursed to Parent and US Seller upon release of the Escrow
Funds to Parent and US Seller at the end of the term of the Escrow Funds
pursuant to Section 2.1 of this Escrow Agreement. Neither US Seller nor Parent
has any legal or beneficial interest in the Escrow Funds or in any interest or
other income received on the investment and reinvestment of the Escrow Funds,
unless and until the Escrow Agent has received the joint written instructions
referred to in Section 2.1.
Section 2. Claims Against the Escrow Funds.
Section 2.1 Distributions From the Escrow Funds. Distributions from the
Escrow Funds shall only be made as hereinafter provided. As soon as practicable
after receipt by the Escrow Agent of joint written instructions executed by
Buyer and the Parent (on behalf of itself and US Seller), the Escrow Agent
shall release the Escrow Funds (or any portion thereof) in accordance with such
joint written instructions.
Section 2.2 Nonexclusive Remedy. Parent's and US Seller's liability with
respect to the Escrow Claims shall not be limited in any manner to the
outstanding balance of funds and other property in the Escrow Funds. Nothing in
this Agreement shall limit the Buyer's rights to pursue all remedies available
to it under the Purchase Agreement with respect to the Escrow Claims and any
other matters arising under or related to the Purchase Agreement.
Section 3. Escrow Agent.
Section 3.1 Duties. The Escrow Agent's obligations and duties in
connection herewith are those specifically enumerated in this Escrow Agreement.
The Escrow Agent also will deliver copies of reports, invoices, and other
documents related to the Escrow Claims that it has received, as well as an
accounting of the Escrow Funds, to each of the parties on written request. The
Escrow Agent's duties will be determined only by reference to this Escrow
Agreement and applicable laws, and the Escrow Agent is not charged with any
duties or responsibilities in connection with any other document or agreement.
The parties acknowledge that the Escrow Agent shall not be responsible for any
diminution in Escrow Funds due to losses resulting from authorized investments.
The Escrow Agent may use its own bond department in executing purchases and
sales of authorized investments.
Section 3.2 Liabilities.
(a) The Escrow Agent will not be in any manner liable or responsible for
the sufficiency, correctness, genuineness, or validity of any instruments
deposited with it or with reference to the form of execution thereof, or the
identity, authority, or rights of any person executing or depositing same, and
the Escrow Agent will not be liable for any loss that may occur by reason of
forgery, false representation, or the exercise of its discretion in any
particular manner or for any other reason, except for its own gross negligence,
bad faith or willful
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misconduct. Except in instances of the Escrow Agent's own gross negligence, bad
faith or willful misconduct, Buyer, Parent and US Seller will jointly and
severally indemnify, defend, and hold the Escrow Agent harmless from any
demands, suits, or causes of action arising out of this Escrow Agreement
(including reasonable attorneys' fees). The Escrow Agent shall be fully
protected in acting in accordance with any written instructions given to it
hereunder and believed by it to have been executed by the proper party or
parties. The Escrow Agent may consult with counsel regarding any of its duties
or obligations hereunder, and shall be fully protected in any action taken in
good faith in accordance with such advice. The costs and expenses of enforcing
this right of indemnification also shall be paid by Buyer, Parent and US Seller
(jointly and severally). The right of indemnification shall survive the
termination of this Escrow Agreement and/or the resignation or removal of the
Escrow Agent.
(b) Neither the Escrow Agent nor any of its officers, directors or
employees shall be liable to any person or party for any action taken or
omitted to be taken by it or any of its officers, directors or employees under
this Escrow Agreement, except in the case of Escrow Agent's gross negligence,
bad faith or willful misconduct
Section 3.3 Receipt. By its execution and delivery of this Escrow
Agreement, the Escrow Agent acknowledges receipt from the Buyer of the Escrow
Funds.
Section 3.4 Fees.
(a) The Escrow Agent's fees hereunder will be as set forth in Schedule 1
and Buyer, Parent and US Seller shall be jointly and severally responsible for
such fees. The fees are intended as full compensation for the Escrow Agent's
services as contemplated by this Escrow Agreement; provided, however, that if
the Escrow Agent or its counsel renders any material service not contemplated
in this Escrow Agreement, or if any material controversy arises hereunder that
results in significant additional services by the Escrow Agent or its counsel,
or the Escrow Agent is made a party to or justifiably intervenes in any
litigation pertaining to this Escrow Agreement, or the subject matter hereof,
the Escrow Agent will be reasonably compensated by Buyer, Parent and US Seller
(jointly and severally) for such extraordinary service and reimbursed by Buyer,
Parent and US Seller (jointly and severally) for all reasonable costs and
expenses, including reasonable attorneys' fees, occasioned by any controversy
or event. As to Buyer, Parent and US Seller only, all fees and expenses due to
the Escrow Agent pursuant to this Section 3.4 shall be borne half by Buyer and
half by Parent and US Seller.
(b) If any fees, expenses or costs incurred by, or any obligations owed
to, Escrow Agent hereunder are not promptly paid when due, Escrow Agent may
reimburse itself therefor from the Escrow Funds and may sell, convey or
otherwise dispose of any Escrow Funds for such purpose. As security for the due
and punctual performance of any and all of Buyer's, Parent's and US Seller's
obligations to Escrow Agent hereunder, now or hereafter arising, Buyer, Parent
and US Seller, individually and collectively, hereby pledge, assign and grant
to Escrow Agent a continuing security interest in, and a lien on, the Escrow
Funds and all additions thereto (whether such additions are the result of
deposits by Buyer, Parent or US Seller or the investment of Escrow Funds). The
security interest of Escrow Agent shall at all times be valid, perfected and
enforceable by Escrow Agent against Buyer, Parent and US Seller and all third
parties in accordance with the terms of this Escrow Agreement.
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Section 3.5 Successor Escrow Agent. The Escrow Agent will have the right
to resign as escrow agent hereunder by delivering 30 days' prior notice in
writing to Buyer, Parent and US Seller. Buyer and Parent (on behalf of itself
and US Seller) will have the right to remove the Escrow Agent at any time by
written notice delivered to the Escrow Agent. If the Escrow Agent resigns or is
removed, a successor escrow agent will be appointed by agreement of Buyer, on
the one hand, and Parent (on behalf of itself and US Seller), on the other
hand, and such resignation or removal will take effect upon such appointment.
Any successor escrow agent at any time serving hereunder will be entitled to
all rights, powers, and indemnities granted to the Escrow Agent hereunder as if
originally named herein. If a successor escrow agent is not named within twenty
(20) days after the notice of resignation, the Escrow Agent may apply to a
court of competent jurisdiction for the appointment of a successor escrow
agent.
Section 3.6 Disputes. In the event that any dispute arises with respect to
this Escrow Agreement or in the event that any claim is made with respect to
the Escrow Funds, then the Escrow Agent, upon receipt of written notice of such
dispute, is authorized and directed to retain in its possession without
liability to any person or party, all of the Escrow Funds until such dispute
shall have been settled either by the mutual agreement of the parties involved
or by a final, unappealable order, decree or judgment of a court of competent
jurisdiction.
Section 3.7 Federal Income Tax. The parties agree that for U.S. federal
income, and applicable state income, tax purposes, all interest and other
income earned on the Escrow Funds shall be considered the currently reportable
income, for federal income tax purposes, of the Parent and US Seller. The
Escrow Agent annually shall file information returns with the United States
Internal Revenue Service and payee statements with the Parent and US Seller,
documenting such income. The Parent and US Seller shall provide the Escrow
Agent with all forms and information necessary to complete such information
returns and payee statements. The Parent and US Seller agree to provide the
Escrow Agent with a certified tax identification number by signing and
returning a W-9 to the Escrow Agent within 30 days from the date hereof. Should
the Escrow Agent become liable for the payment of taxes, including withholding
taxes, relating to income derived from any funds held by it in the Escrow Funds
or any payment made hereunder the Escrow Agent may pay such taxes from the
Escrow Funds.
Section 3.8 Merger, Consolidation, etc. Any corporation or association in
which the Escrow Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its corporate trust business
and assets as a whole or substantially as a whole, or any corporation or
association resulting from any such conversion, sale, merger, consolidation or
transfer to which it is a party, shall be and become successor escrow agent
hereunder and vested with all of the title to the assets and all the trusts,
powers, discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further
act, deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 3.9 Consent to Jurisdiction. Buyer, Parent, US Seller and Escrow
Agent consent and submit to the jurisdiction of the courts of the State of New
York and of any federal court in the State of New York in connection with any
actions or proceedings arising out of or in relating to this Escrow Agreement.
In any such action or proceeding Buyer, Parent, US
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Seller and Escrow Agent hereby absolutely and irrevocably waive personal
service of any summons, complaint, declaration or other process and agrees that
service thereof may be made by certified or registered first class mail
directed to Buyer, Parent, US Seller and Escrow Agent at the addresses set
forth in this Escrow Agreement.
Section 4. Interaction of Documents.
US Seller, Parent and Buyer agree that nothing in this Escrow Agreement
modifies their rights and obligations under the Purchase Agreement.
Section 5. Miscellaneous.
Section 5.1 Binding Effect. The provisions of this Escrow Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided that Parent, US Seller
and Buyer, respectively, may not assign, delegate or otherwise transfer any of
its rights or obligations under this Escrow Agreement without the consent
(which consent shall not be unreasonably withheld) of Buyer (in the case of
Parent and US Seller) or Parent (in case of Buyer); provided, further, that
Buyer may without the prior written consent of Parent and US Seller (a) assign
its rights hereunder to any lender providing financing in connection with the
transactions contemplated hereby and hereunder as collateral security, (b)
assign its rights and obligations hereunder in whole or in part to any of the
Transferred Companies or to any purchaser of all or substantially all of the
assets of the Business or Transferred Company or (c) assign its rights and
obligations hereunder in whole or in part to one or more Affiliates of Buyer
which shall assume Buyer's obligations and liabilities hereunder, provided that
in such case Buyer shall remain liable for all obligations of Buyer hereunder.
Section 5.2 Governing Law. This Escrow Agreement will be governed by and
construed and enforced in accordance with the internal laws of New York without
giving effect to the principles of conflict of laws thereof.
Section 5.3 Headings. This section headings contained in this Escrow
Agreement are for reference purposes only and will not affect in any way the
meaning or interpretation of this Escrow Agreement.
Section 5.4 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and
shall be given as follows or to such address as the party may specify,
if to Buyer, to:
Xxxxxxx Incorporated
000 Xxxxx Xxxxxxx Xxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Vice President, General Counsel and Secretary
Fax: (000) 000-0000
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with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: R. Xxxxxx Xxxxxxxxx
Fax: (000) 000-0000
if to Parent and US Seller, to:
c/o U.S. Industries, Inc.
000 Xxxx Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, XX 00000-0000
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx
Fax: (000) 000-0000
If to Escrow Agent, addressed to:
The Bank of New York
Corporate Trust Division
0 Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
Fax: 000-000-0000
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding business day in the place
of receipt.
Section 5.5 Counterparts. This Escrow Agreement may be executed in two or
more counterparts, each of which will be deemed to be an original but all of
which together will constitute one and the same instrument.
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Section 5.6 Entire Agreement; Modification. This Escrow Agreement and the
Purchase Agreement, together with all exhibits and schedules thereto,
constitutes the entire agreement among the parties pertaining to the Escrow
Claims. This Escrow Agreement may be modified only by a written instrument
signed by authorized representatives of each of the parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the date first written above.
U.S. INDUSTRIES, INC.
By:
---------------------------------
Name:
Title:
JUSI HOLDINGS, INC.
By:
---------------------------------
Name:
Title:
XXXXXXX INCORPORATED
By:
---------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Escrow Agent
By:
---------------------------------
Name:
Title:
