ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of _________, 1997 (this "Agreement"),
among FAMILY GOLF CENTERS, INC., a Delaware corporation with executive offices
at 000 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("FGC"), XXXXXX X. XXXXXX
XX., having an address at ______________________ (the "Shareholder") and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, incorporated under the laws of the
United States of America with executive offices at 0 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Escrow Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, simultaneously with the execution hereof, FGC, Lake Grove
Family Golf Centers, Inc., a New York corporation and a wholly-owned subsidiary
of FGC ("Merger Sub"), Leisure Complexes, Inc., a New York corporation ("LCI"),
and the Shareholder are consummating the transactions contemplated by that
certain Agreement and Plan of Merger, dated as of ____ __, 1997 (the "Merger
Agreement"), pursuant to which, among other things, LCI is merging with and
into Merger Sub; and
WHEREAS, pursuant to the Merger Agreement, 40,000 shares (the
"Escrowed Shares") of Common Stock, par value $1.00 per share, of FGC ("FGC
Common Stock") are required to be placed into an escrow account (the "Escrow
Account") to be maintained by the Escrow Agent against any claims for indemnity
under the Merger Agreement; and
WHEREAS, this is the Escrow Agreement referred to in the Merger
Agreement.
NOW, THEREFORE, it is agreed as follows:
I. ESCROW.
SECTION 1.01 APPOINTMENT OF ESCROW AGENT. The Shareholder and FGC
hereby appoint the Escrow Agent, and the Escrow Agent hereby agrees to serve,
as Escrow Agent in accordance with, and pursuant to, this Agreement.
SECTION 1.02 OPERATION OF ESCROW ACCOUNT. The parties hereto agree
that, subject to Section 1.03 hereof, the Escrow Account shall operate as
follows:
(a) Immediately after the Effective Time, FGC shall deposit into
the Escrow Account the Escrowed Shares, which constitute part of the Merger
Consideration to be paid to the Shareholder pursuant to the Merger Agreement,
by delivering to the Escrow Agent a stock certificate in the Shareholder's name
evidencing such Escrowed Shares, together with a stock power duly endorsed in
blank by the Shareholder.
(b) At any time and from time to time on or prior to the first
anniversary of the date of this Agreement, FGC shall be entitled to give one or
more notices to the Escrow Agent, signed by its President or any Vice President
(with a copy to the Shareholder), to the effect that there has been an event
entitling FGC to indemnification from the Shareholder pursuant to the Merger
Agreement. Each such notice shall specify the amounts owed by the Shareholder
pursuant to the Merger Agreement, the calculation of such amounts and, in
reasonable detail, the basis therefor.
(c) Twenty (20) days after the Escrow Agent has received a notice
pursuant to Section 1.02(b) (of, if not a buisness day, on the next business
day following such twentieth day), the Escrow Agent shall deliver to FGC
Escrowed Shares having a value, determined as set forth in Section 1.02(e),
equal to the amount specified in such notice unless the Shareholder shall have
given written notice to the Escrow Agent (with a copy to FGC) before such date
that the Shareholder disagrees with FGC's determination that FGC is entitled to
indemnification with respect to the Merger Agreement, which notice shall set
forth in reasonable detail the basis for such disagreement.
(d) Should any dispute arise with respect to the delivery,
ownership or right of possession of the Escrowed Shares, the Escrow Agent, as
more fully set forth in paragraph (xi) of Article III, is authorized and
directed to retain in its possession, without liability to anyone, all or any
part of the Escrowed Shares 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
for which time for appeal has expired and no appeal has been perfected, but the
Escrow Agent shall be under no duty whatsoever to institute or defend any such
proceedings, and may, in its discretion, deposit such Escrowed Shares with the
court which is hearing such dispute.
(e) For purposes of this Agreement, in the event Escrowed Shares
are required to be delivered to FGC pursuant to this Agreement, the value of
each Escrowed Share shall be deemed equal to the average of the daily Closing
Prices per shares of FGC Common Stock during the period of 10 consecutive
trading days commencing 20 trading days prior to the date of delivery of such
Escrowed Shares. The "Closing Price" of a share of FGC Common Stock on any day
means the last sale price (or, if no last sale is reported, the average of the
high bid and low asked prices) for a share of FGC Common Stock on such day (or,
if such day is not a trading day, on the next preceding trading day) as
reported on Nasdaq or, if not reported on Nasdaq, as quoted by the National
Quotation Bureau Incorporated, or if the FGC Common Stock is listed on an
exchange, on the principal exchange on which the FGC Common Stock is listed. If
for any day the Closing Price of a share of FGC Common Stock is not
determinable by any of the foregoing means, then the Closing Price for such day
shall be determined in good faith by the Escrow Agent on the basis of such
quotations and other considerations as it may deem appropriate.
(f) In the event that an indemnification claim is made in
accordance with Section 1.02(b) hereof and such claim is not disputed by the
Shareholder within the 20-day period referred to in Section 1.02(c) hereof,
then the Shareholder shall have the right to satisfy such indemnification
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claim in cash rather than in Escrowed Shares being held by the Escrow Agent,
provided that the full amount of such claim is paid to FGC within such 20-day
period. In the event the Shareholder satisfies a claim with the requisite
amount of cash, the Escrowed Shares that would have otherwise been distributed
to FGC in payment of such claim shall be distributed to the Shareholder.
SECTION 1.03 DISTRIBUTION OF ESCROWED SHARES. Unless a notice under
Section 1.02(b) has been given and Escrowed Shares in satisfaction of such
notice has not been delivered to FGC, 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 Shares or such portion of it as at the time remains
in escrow, together with all dividends and distributions received by the Escrow
Agent with respect thereto, shall be returned to the Shareholder on the first
anniversary of the date of this Agreement.
SECTION 1.04 TERMINATION OF ESCROW ACCOUNT. This Agreement and the
Escrow Account will terminate at 5:00 P.M., New York City local time, on the
date on which all of the Escrowed Shares contained in the Escrow Account shall
be distributed in accordance with this Agreement.
SECTION 1.05 VOTING. The FGC Shares held in the Escrow Account shall
be voted by the Shareholder.
II. 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) sent by
certified mail, return receipt requested, with proper postage prepaid, (c) sent
by prepaid over-night delivery or (d) sent by confirmed facsimile, and
addressed as follows:
If to FGC to it at:
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
with a copy to:
Xxxxx & Xxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx Xx.
Facsimile: 000-000-0000
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If to the Shareholder to him at:
Xxxxxx X. Xxxxxx Xx.
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Facsimile:
with a copy to:
Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Facsimile: 000-000-0000
If to the Escrow Agent, to it at:
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
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 or refused.
III. CONCERNING THE ESCROW AGENT.
To induce the Escrow Agent to act hereunder, it is further agreed by
the Shareholder and FGC that:
(i) The Escrow Agent shall not be under any duty to give the
Escrowed Shares 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.
(ii) This 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 Agreement against the Escrow
Agent. The Escrow Agent shall not be bound by the provisions of any agreement
among the other parties hereto except this Agreement.
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(iii) The Escrow Agent shall not be liable, except for its own
gross negligence, willful misconduct or breach of any representations,
warranties or covenants contained in this Agreement, and, except with respect
to claims based upon such gross negligence, willful misconduct or breach 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 Agreement.
(iv) 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 of the
service thereof. The 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 advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
(v) The Escrow Agent may act pursuant to the advice of counsel
with respect to any matter relating to this Agreement and shall not be liable
for any action taken or omitted in good faith and in accordance with such
advice.
(vi) The Escrow Agent does not have any interest in the Escrowed
Shares 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 paragraph (vi) and
paragraph (iii) of this Article III shall survive notwithstanding any
termination of this Agreement or the resignation of the Escrow Agent.
(vii) The 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.
(viii) 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.
(ix) The 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 the Shareholder and FGC or at
any time may resign by giving written notice to such effect to the Shareholder
and FGC. Upon any such termination or resignation, the Escrow Agent shall
deliver the Escrowed Shares to any successor escrow agent jointly designated by
the other parties hereto in writing, or to any court of competent jurisdiction
if no such successor escrow agent is agreed upon, whereupon the Escrow Agent
shall be discharged of and from any and all further obligations arising in
connection with this Agreement. The termination or resignation of the Escrow
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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 30 days
after the date of delivery: (1) to the Escrow Agent of the other parties'
written notice of termination or (2) to the other parties hereto of the Escrow
Agent's written notice of resignation. 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 keep the Escrowed Shares 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.
(x) The 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.
(xi) 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 Shares, 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 Escrowed Shares until the Escrow Agent shall have
received (A) a final and non-appealable order of a court of competent
jurisdiction directing delivery of the Escrowed Shares or (B) a written
agreement executed by the other parties hereto directing delivery of the
Escrowed Shares, in which event the Escrow Agent shall disburse the Escrowed
Shares 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 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.
(xii) As consideration for its agreement to act as Escrow Agent
as herein described, FGC shall pay the Escrow Agent fees determined in
accordance with the terms set forth on Exhibit A hereto (and made a part of
this Agreement as if herein set forth). In addition, FGC and the Shareholder
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, expenses, and disbursements of its
counsel) and to share equally the costs thereof.
(xiii) No publicly distributed material or other matter in any
language (including, without limitation, notices and reports) 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.
IV. MISCELLANEOUS.
SECTION 4.01 BINDING EFFECT. This Agreement shall be binding upon, and
inure solely to the benefit of, the parties hereto and their respective
successors and assigns, heirs, administrators,
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and representatives, and shall not be enforceable by, or inure to the benefit
of, any other third party, except as provided in paragraph (ix) of Article III
with respect to the termination of, or resignation by, the Escrow Agent. No
party may assign any of its rights or obligations under this Agreement without
the written consent of the other parties.
SECTION 4.02 CHOICE OF LAW. This Agreement shall be construed in
accordance with, and governed by, the internal law of the State of New York
(without reference to its rules as to conflicts of law).
SECTION 4.03 MODIFICATION; WAIVERS. This Agreement may only be
modified by a writing signed by all of the parties hereto. No waiver shall be
effective against a party unless in a writing signed by such party.
SECTION 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 are to Sections and Articles, respectively,
contained herein.
SECTION 4.05 COUNTERPARTS. This Agreement may be executed in one or
more counterparts but all such separate counterparts shall constitute but 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.
SECTION 4.06 CAPITALIZED TERMS. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the respective meanings
given to them in the Merger Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
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XXXXXX X. XXXXXX XX.
FAMILY GOLF CENTERS, INC.
BY:
--------------------------------
NAME:
TITLE:
7
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
BY:
--------------------------------
NAME:
TITLE:
8
EXHIBIT A
ESCROW AGENT FEES: [$100.00 PER MONTH]
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