Exhibit III
ESCROW AGREEMENT
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THIS ESCROW AGREEMENT, dated as of December 29, 1997 by and among RAM GOLF
CORPORATION, a Delaware corporation, ("Seller"); TEARDROP RAM GOLF COMPANY, a
Delaware corporation, ("Buyer"); and Crummy, Del Deo, Dolan, Griffinger &
Xxxxxxxxx, as escrow agent ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Buyer, Seller, TearDrop Golf Company, a Delaware corporation
("Parent"), and Xxxxx X. Xxxxxxxxxx, a shareholder of Seller, are parties to
that certain Asset Purchase Agreement (the "Purchase Agreement"), dated December
23, 1997; and
WHEREAS, in connection with the closing of the transactions contemplated by
the Purchase Agreement (the "Closing"), Seller and Buyer desire to deposit
100,000 shares of common stock, par value $.01 per share, of Parent ("Common
Stock") into escrow with the Escrow Agent, to be held by Escrow Agent pursuant
to the terms and conditions of this Escrow Agreement pending the occurrence of
certain events set forth herein; and
WHEREAS, Escrow Agent is willing to serve in such capacity on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the aforesaid premises and the mutual
covenants and conditions hereinafter set forth, the parties hereby agree as
follows:
1. Definitions. Unless otherwise defined herein, each capitalized term
used in this Agreement shall have the meaning ascribed to such term in the
Purchase Agreement.
2. Appointment of Escrow Agent. Each of Buyer and Seller hereby appoints
and designates Escrow Agent as the Escrow Agent for the purposes and upon the
terms set forth herein, and Escrow Agent hereby accepts such appointment and
agrees to act as Escrow Agent hereunder for the purposes and upon the terms set
forth herein.
3. Deposit of Escrow Shares.
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(a) On or before the date hereof, Buyer has deposited with Escrow Agent
100,000 shares of Common Stock, constituting a portion of the escrow deposit
required by Section 3.2(a)(iii) of the Purchase Agreement (such shares, as
increased by any dividends or other deposits thereon, the "Escrow Shares") and
executed stock powers. Seller and Buyer hereby agree that the Escrow Shares will
be held in escrow
pending the disposition thereof pursuant to this Agreement and the Purchase
Agreement.
(b) Escrow Agent hereby accepts the Escrow Shares and shall hold the
Escrow Shares in accordance with the terms and conditions of this Agreement.
4. Delivery of the Escrow Shares. The release of the Escrow Shares at any
given time is subject to receipt, on or after March 19, 1998, by Escrow Agent of
a written notice (a "Notice") executed by an authorized officer of each of Buyer
and Seller, instructing Escrow Agent to disburse the Escrow Shares to Buyer or
Seller as set forth below and as indicated in such instructions. If such Notice
indicates that Buyer has received, on or prior to March 19, 1998, the dollar
amount of the inventory with respect to Ram products ordered from vendors
located outside of the United States that is necessary to satisfy 75% of the
forecasted sales for April 1998, subject to the terms of Section 7.5(g) of the
Purchase Agreement, then Escrow Agent shall release the Escrow Shares to Seller.
If such Notice indicates that Buyer has not received such amount on or prior to
March 19, 1998, subject to the terms of Section 7.5(g) of the Purchase
Agreement, then Escrow Agent shall release the Escrow Shares to Buyer.
5. Escrow Agent Compensation. Escrow Agent shall be reimbursed for all
actual out-of-pocket expenses incurred in performing the services required
hereunder. The parties hereby agree that Buyer and Seller shall be liable
equally for all such amounts due to Escrow Agent. The fees of any replacement
Escrow Agent shall be split evenly by the Buyer and Seller.
6. Disputes. Notwithstanding the provisions of Section 4 of this
Agreement, in the event a dispute arises with regard to the escrow created by
this Agreement, the following provisions shall apply:
(a) If Escrow Agent shall receive a written notice from Buyer or
Seller stating that a disagreement or dispute has arisen between the parties or
any other persons resulting in adverse claims and demands being made from the
Escrow Shares (any such event being hereinafter referred to as a "Dispute"),
whether or not litigation has been instituted, then in any such event, Escrow
Agent shall continue to hold the Escrow Shares until Escrow Agent receives
either: (i) a written notice signed by Buyer and Seller, directing the delivery
of the Escrow Shares in accordance with this Agreement; or (ii) a final non-
appealable order of a court of competent jurisdiction, entered in an action,
suit or proceeding in which Buyer and Seller are parties, directing the delivery
of the Escrow Shares. In either of such events, Escrow Agent shall then
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deliver the Escrow Property in accordance with such direction. Escrow Agent
shall not be or become liable in any way or to any person for its refusal to
comply with any such claims and demands in the event of a Dispute unless and
until it has received such direction. Upon compliance with such direction,
Escrow Agent shall be released of and from all liability hereunder.
(b) Notwithstanding the foregoing, Escrow Agent shall have the
following rights in the circumstances described in Section 6(a) hereof:
(i) If Escrow Agent shall have received a notice signed by Buyer
or Seller advising that litigation between the parties over entitlement to the
Escrow Shares has been commenced by any person, Escrow Agent may, on notice to
the parties, deposit the Escrow Property with the clerk of the court in which
such litigation is pending; or
(ii) Escrow Agent may, on notice to Buyer and Seller, take such
affirmative steps as it may, at its option, elect in order to terminate its
duties as Escrow Agent, including, but not limited to, the deposit of the Escrow
Property with a court of competent jurisdiction and the commencement of an
appropriate action, the costs of which shall be borne by the parties hereto save
and except Escrow Agent. Upon the taking by Escrow Agent of the action described
in clause (i) or clause (ii) of this Section, Escrow Agent shall be released of
and from all liability hereunder except for gross negligence or willful
misconduct.
(c) Except for Escrow Agent's gross negligence or willful misconduct,
Escrow Agent shall not be responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of any instrument deposited
with it, or any notice or demand given to it or for the form of execution of any
such instrument, notice or demand or for the identification, authority or rights
of any person executing, depositing or giving the same or for the terms and
conditions of any instrument, pursuant to which the parties may act.
(d) Escrow Agent shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not incur any liability:
(i) in acting upon any signature, notice, demand, request, waiver, consent,
receipt or other paper or document believed by Escrow Agent to be genuine and
Escrow Agent may assume that any person purporting to give it any notice on
behalf of any party in accordance with the provisions hereof has been duly
authorized to do so; or (ii) in otherwise acting or failing to act under this
Agreement except in the case of Escrow Agent's gross negligence or willful
misconduct.
(e) The terms and provisions of this Agreement shall create no right
in any person, firm or corporation other than the parties and their respective
successors and assigns and no third party shall have the right to enforce or
benefit from the terms hereof.
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(f) Escrow Agent shall not be bound by any modification, cancellation
or rescission of this Agreement unless the same is in writing and signed by the
other parties hereto and a copy thereof has been received by Escrow Agent.
(g) Escrow Agent has executed this Agreement for the sole purpose of
agreeing to act as such in accordance with the terms of this Agreement.
(h) The parties hereto further agree to equally indemnify Escrow
Agent from and against any and all losses, claims, damages or liabilities and
expenses, including reasonable attorneys fees which may be asserted against it
or to which it may be exposed or may incur by reason of its performance
hereunder, except when such performance was grossly or willfully negligent.
7. Notices. All notices hereunder shall be given in accordance with the
notice provisions of the Purchase Agreement. In addition, notices to Escrow
Agent shall be addressed to it at:
Crummy, Del Deo, Dolan, Griffinger & Xxxxxxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
8. Termination. This Agreement shall terminate upon the earliest
occurrence of any of the following events: (i) the written agreement of all
parties who are bound by the terms hereof; or (ii) upon the delivery by Escrow
Agent of all of the Escrow Property in accordance with the terms of this
Agreement.
9. Incorporation. The preamble to this Agreement and all annexes,
schedules and exhibits annexed hereto are incorporated herein by this reference
as if set forth herein in their entirety.
10. Severability. In the event any provision of this Agreement shall be
held invalid or unenforceable by any Court, such holding shall not invalidate or
render unenforceable any other provision of this Agreement and each and every
other provision of this Agreement shall continue in full force and effect.
11. Binding Effect; Amendment. This Agreement contains the entire
agreement of the parties, and shall inure to the benefit of and be binding upon
the parties hereto and upon their successors in interest of any kind whatsoever,
including, but not limited to, their assignees, administrators, trustees,
attorneys-in-fact and legal representatives (except as herein otherwise
provided). It may not be waived, changed or discharged orally, but only by an
agreement in writing, signed by the parties hereto.
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12. Waiver of Breach. The waiver by any party of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any other or
subsequent breach by any party.
13. Section Headings. Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Construction.
(a) This Agreement shall be construed pursuant to the laws of the State of
Illinois in effect at the time of such construction without giving effect to
conflicts of laws principles.
(b) Nothing in this Agreement shall be construed to limit or abridge the
rights and obligations of the Seller and Buyer under the Purchase Agreement.
15. Counterparts. This Agreement may be executed in one or more
counterparts in which event all of said counterparts shall be deemed to
constitute one original of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above-written.
ESCROW AGENT:
Crummy, Del Deo, Dolan, Griffinger
& Xxxxxxxxx
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx, Esq.
Title: Director
SELLER:
RAM GOLF CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxx
Title: President
BUYER:
TEARDROP RAM GOLF COMPANY
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: President
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