CASH ESCROW AGREEMENT
CASH ESCROW AGREEMENT, dated as of ____________, 1997 (this
"AGREEMENT"), by and among DIVOT CITY, A CALIFORNIA LIMITED PARTNERSHIP, having
an address at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 ("SELLER"),
MILPITAS FAMILY GOLF CENTERS, INC., a Delaware corporation having an address at
000 Xxxxxxxxxxx Xxxx, Xxxxx 000X, Xxxxxxxx, Xxx Xxxx 00000 ("PURCHASER"), and
SANTA XXXXX LAND TITLE COMPANY at 000 Xxxxxx Xxxxxx xx Xxx Xxxx, Xxxxxxxxxx
00000 ("ESCROW AGENT").
W I T N E S E T H:
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WHEREAS, simultaneously with the execution hereof, Seller and
Purchaser are consummating the transactions contemplated by the Assignment and
Assumption of Lease Agreement dated as of the date hereof (the "PURCHASE
AGREEMENT"), between Seller and Purchaser;
WHEREAS, pursuant to the Purchase Agreement, Seller is required to
deposit $100,000.00 into an escrow account to be maintained by Escrow Agent to
be held against any claims for indemnity under Article 6.1.1 of the Purchase
Agreement; and
WHEREAS, this is the Escrow Agreement referred to in the Assignment
and Assumption of Lease Agreement. Capitalized terms used in this Escrow
Agreement and not otherwise defined herein shall have the respective meanings
given to them in the Purchase Agreement.
NOW, THEREFORE, it is agreed as follows:
1. ESCROW.
1.01 APPOINTMENT OF ESCROW AGENT.
(a) Seller and Purchaser hereby appoint Escrow Agent, and Escrow Agent
hereby agrees to serve, as Escrow Agent in accordance with, and pursuant to,
this Agreement.
(b) Escrow Agent shall establish at a Federally Insured Bank of its
choice a separate Federally insured, interest bearing account for the benefit
of Seller (the "ESCROW ACCOUNT") for any amounts received by it hereunder.
(c) All monies, including interest thereon, held by Escrow Agent in
the Escrow Account pursuant to the terms hereof shall be hereinafter referred
to as the "ESCROWED FUNDS".
(d) Seller shall be responsible for the payment of any income taxes
payable in connection with any interest earned in the Escrow Account except
with respect to any interest on Escrowed Funds paid to or for the benefit of
Purchaser.
1.02 OPERATION OF ESCROW ACCOUNT. The parties hereto agree that the
Escrow Account shall operate as follows:
(a) At the Closing of the escrow of the Purchase Agreement, Seller
shall deliver or cause to be delivered to Escrow Agent $100,000.00. Escrow
Agent shall hold such amount as Escrowed Funds in the Escrow Account.
(b) At any tie prior to six (6) months after the date Escrow Agent
receives the $100,000 pursuant to section 1.02 (a) (the "Escrow Period"),
Purchaser shall be entitled to give a notice to Escrow Agent and Seller, signed
by Purchaser's President or any Vice President (with a copy to Seller), to the
effect that there has been
an event entitling Purchaser to indemnification from Seller pursuant to Article
6.1.1 of the Purchase Agreement, which notice shall specify the amounts owed by
Seller pursuant to the Purchase Agreement, the calculation of such amounts and
the basis therefore. Seller and Purchaser shall provide Escrow Agent with a
"Certificate of Incumbency" regarding the identity of their Presidents and
Vice-Presidents.
(c) Twenty (20) days after Escrow Agent has received a notice pursuant
to Section 1.02 (b) hereof (or, if not a business day, on the next business day
following such twentieth day) Escrow Agent shall deliver to Purchaser such
portion of the Escrowed Funds as is specified in such notice unless Seller
shall have notified Escrow Agent (with a copy to Purchaser) in writing before
such date that Seller disagrees with Purchaser's determination that Purchaser
is entitled to indemnification with respect to the Purchase Agreement, which
notice shall be set forth in reasonable detail the basis for such disagreement.
(d) Should there be any dispute with respect to the delivery,
ownership, or right of possession of any of the Escrowed Funds during the
Escrow Period, Escrow Agent, as more fully set forth in Section 3.11 hereof, is
authorized and directed to retain in its possession, without liability to
anyone, all of any part of the Escrowed Funds until such dispute shall have
been settled, either by mutual agreement by the parties concerned, or by a
final order, decree, or judgment of a court of competent jurisdiction in the
United States of America and time for appeal has expired and no appeal have
been perfected, but Escrow Agent shall be under no duty whatsoever to institute
or defend any such proceedings, and may, in its discretion, deposit such
Escrowed Funds with a court of competent jurisdiction in the United States
of America and be relieved of any and all liability to any of the parties
hereto upon such deposit.
1.03 DISTRIBUTION OF ESCROWED FUNDS. Unless a notice under Section
1.02 (b) hereof has been given and Escrowed Funds in satisfaction of such
notice have not been delivered to Purchaser, either because the 20-day period
has not yet run out or because a dispute relating to the claim made by such
notice is then pending, the Escrowed Funds or such portion of them as at the
time remains in escrow and is not in dispute, together with all interest and
income received by Escrow Agent with respect thereto shall be returned to
Seller on or before two months after the six (6) months Escrow Period provided
in section 1.02(b) has elapsed.
1.04 TERMINATION OF ESCROW ACCOUNT. This Agreement and the Escrow
Account will terminate at 5:00 p.m., Pacific local time, on the date on which
all of the Escrowed Funds contained in the Escrow Account are distributed as
set forth under section 1.03 above.
2. NOTICES.
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be (a) delivered by hand, (b)
facsimile, or (c) over-night delivery with proper postage prepaid, return
receipt required, and addressed as follows:
If to Purchaser to:
Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx, General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller to:
Divot City
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
with a copy to:
Xxxxxxxxx X. Eagle III
THE EAGLE LAW FIRM
0000 Xxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
If to Escrow Agent, to:
Santa Xxxxx Land Title Company
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner. Except as
otherwise provided herein, no notice or communication shall be effective until
received.
3. CONCERNING ESCROW AGENT.
To induce Escrow Agent to act hereunder, it is further agreed by
Seller and Purchaser that:
3.01 Escrow Agent shall not be under any duty to give the Escrowed
Funds 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 Agreement.
3.02 This Agreement expressly sets forth all the duties of Escrow
Agent with respect to any and all matters pertinent hereto. No implied duties
or obligations shall be read into this Agreement against Escrow Agent. Escrow
Agent shall not be bound by the provisions of any agreement among the other
parties hereto except this Agreement.
3.03 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 Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless 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 Agreement. Without limiting the foregoing,
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 gross negligence or willful misconduct) in the investment
or reinvestment of the Escrowed Funds; or any loss of interest incident to any
such delays. This Section 3.03 shall survive notwithstanding any termination of
this Agreement for the resignation of Escrow Agent.
3.04 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. Escrow
Agent may act in reliance upon any instrument or signature believed by it in
good faith to be genuine and may assume, if in good faith, that any person
purporting to give notice or receipt or advise or make any statement or execute
any document in connection with the provisions hereof has been duly authorized
to do so.
3.05 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 good faith and in accordance with such
advice.
3.06 Escrow Agent does not have any interest in the Escrowed Funds
deposited hereunder, but is serving as escrow holder only. Any payments of
income from the Escrow Account shall be subject to withholding regulations then
in force with respect to United States taxes. This Section 3.06 shall survive
notwithstanding any termination of this Agreement or the resignation of Escrow
Agent.
3.07 Escrow Agent makes no representation as to the validity, value,
genuineness, or the collectibility of any security or other documents or
instrument held by, or delivered to, it.
3.08 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.
3.09 Escrow Agent (and any successor escrow agent) at any time may be
discharged from its duties and obligations hereunder by the delivery to it of
notice of termination signed by Purchaser and Seller or at any time may resign
by giving written notice to such effect to Purchaser and Seller. Upon any such
termination or
resignation, Escrow Agent shall delivered the Escrowed Funds to any successor
escrow agent jointly designated by the parties hereto in writing, or to any
court of competent jurisdiction if no such successor escrow agent is agreed
upon, whereupon Escrow Agent shall be discharged of and from any and all
further obligations arising in connection with this Escrow Agreement. The
termination or resignation of Escrow Agent shall take effect on the earlier of
(a) the appointment of a successor (including a court of competent jurisdiction
or (b) the day that is thirty (30) days after the date of delivery: (i) to
Escrow Agent of the other parties' notice of termination or (ii) to the other
parties hereto of Escrow Agent's written notice of resignation. If at that time
Escrow Agent has not received a designation of a successor escrow agent, Escrow
Agent's sole responsibility after that time shall be to keep the Escrowed Funds
safe until receipt of a designation of successor escrow agent or a joint
written disposition instruction by the other parties hereto or an enforceable
order of a court of competent jurisdiction.
3.10 Escrow Agent shall have no responsibility for the contents of any
writing of any third party contemplated herein as a means to resolve disputes
and may rely without any liability upon the contents thereof.
3.11 In the event of any disagreement among or between the other
parties hereto resulting in adverse claims or demands being made in connection
with the Escrowed Funds, or in the event that Escrow Agent in good faith is in
doubt as to what action it should take hereunder, Escrow Agent shall be
entitled to retain the Escrowed Funds until Escrow Agent shall have received
(a) a final and non-appealable order of a court of competent jurisdiction in
the United States of America directing delivery of the Escrowed Funds or (b) a
written agreement executed by the other parties hereto
directing delivery of the Escrowed Funds, in which event Escrow Agent shall
disburse the Escrowed Funds in accordance with such order or agreement. Any
court order referred to in (a) above shall be accompanied by a legal opinion by
counsel for the presenting party satisfactory to Escrow Agent to the effect
that said court order is final and non-appealable. Escrow Agent shall act on
such court order and legal opinions without further question.
3.12 As consideration for its agreement to act as Escrow Agent as
herein described, each of Purchaser and Seller shall pay one half of the Escrow
Agent's fees determined in accordance with the terms set forth on Exhibit A
hereto (and made a part of this Escrow Agreement as if herein set forth). In
addition, Purchaser and Seller agree to reimburse Escrow Agent (on a 50/50
basis) for all reasonable expenses, disbursements, and advances incurred or
made by Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses, and disbursements of its counsel).
4. MISCELLANEOUS.
4.01 BINDING EFFECT. This escrow Agreement shall be binding upon, and
inure solely to the benefit of, the parties hereto and their respective
successors and assigns, heirs, administrators, and representatives, and shall
not be enforceable by, or inure to the benefit of, any other third party,
except as provided in Section 3.09 hereof with respect to the termination of,
or resignation by, Escrow Agent. No party may assign any of its rights or
obligations under this agreement without the written consent of the other
parties.
4.02 CHOICE OF LAW. This Agreement shall be construed in accordance
with, and governed by, the internal law of the State of California.
4.03 MODIFICATION. This Agreement may only be modified by a writing
signed by all of the parties hereto.
4.04 HEADINGS. The section headings herein are for convenience only
and shall not affect the construction thereof. Unless otherwise indicated,
references to Sections and Articles, respectively, contained herein.
4.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts but all such separate counterparts shall constitute both one and
the same instrument; provided that, although executed in counterparts, the
executed signature pages of each such counterpart may be affixed to a single
copy of this Agreement which shall constitute an original.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
MILPITAS FAMILY GOLF CENTERS, INC.
By:
-------------------------------------
Name:
Title:
DIVOT CITY, A CALIFORNIA LIMITED
PARTNERSHIP
By: D.C. MANAGEMENT, INC.,
its general partner
By:
--------------------------------
Name:
Title:
SANTA XXXXX LAND TITLE COMPANY
By:
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Name:
Title:
