ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of August 29, 1995, among FAMILY GOLF
CENTERS, INC., a Delaware corporation with executive offices at 000
Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("FGC"), DENVER FAMILY GOLF
CENTERS, INC., a Delaware corporation with executive offices at 000
Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Subsidiary"), SWINGMASTER GOLF AT
CENTENNIAL, L.P., a Colorado limited partnership with executive offices at
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("Swingmaster"), XXXXXX X.
XXXXXX, having an adress at 00 Xxxxxx Xxxx, Xxxxxxx, Xxx Xxxx 00000
("Xxxxxx"), XXXXXX XXXXX, having an address c/x Xxxxx Xxxxxx, 0000 Xxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxx, Attn: Xxxxxxx Xxxxxx ("Price") 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, Swingmaster and
Denver Family Golf Centers, Inc., a wholly-owned Delaware subsidiary of FGC
("Subsidiary"), are consummating the transactions contemplated by the Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), among
Swingmaster and Subsidiary, pursuant to which, among other things, Subsidiary
shall purchase certain assets of Swingmaster in exchange for (i) 40,000 shares
of common stock, par value $.01 per share (the "FGC Common Stock") and (ii)
$800,000 in cash, as adjusted as set forth in the Purchase Agreement;
WHEREAS, Swingmaster has agreed to pay Xxxxxx and Price a brokerage
commission for procuring the Purchase Agreement equal to 1,852 shares of FGC
Common Stock to Xxxxxx (the "Xxxxxx Shares") and 1,629 shares of FGC Common
Stock to Price (the "Price Shares"), leaving Swingmaster with 36,519 shares of
FGC Common Stock in the aggregate (the "Swingmaster Shares");
WHEREAS, pursuant to the Purchase Agreement, the total shares payable
thereunder and a portion of the cash consideration payable thereunder are
required to be placed into an escrow account (the "Escrow Account") to be
maintained by the Escrow Agent; and
WHEREAS, this is the Escrow Agreement referred to in the Purchase
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. Swingmaster, Graham, Price,
Subsidiary 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. Simultaneously with the execution and delivery of this
Agreement, FGC shall deposit into the Escrow Account (a) an aggregate of
40,000 shares of FGC Common Stock (the "Escrowed Shares"), (b) $329,282.49 in
cash by wire transfer (the "Escrowed Cash") and (c) four (4) fully executed
and acknowledged counterparts of an Assignment and Assumption of Lease between
Subsidiary, as assignor, and Swingmaster, as assignee. Escrow Agent shall hold
all Escrowed Shares and all dividends and distributions in respect thereof and
all Escrowed Cash (collectively, the "Escrowed Property") in the Escrow
Account as set forth herein.
1.02 OPERATION OF ESCROW ACCOUNT.
(a) At any time on or after September 13, 1996, Swingmaster
or Subsidiary shall be entitled to give a notice to the Escrow Agent (with a
copy to the other party), to the effect that it has elected to unwind the
Purchase Agreement because the Arapahoe County Public Airport Authority
("Landlord") did not unconditionally execute and deliver to Subsidiary a
Landlord's Consent and Estoppel Certificate (the "Consent and Estoppel"),
substantially in the form of Exhibit A attached hereto.
(b) Twenty days after the Escrow Agent has received a notice
pursuant to Section 1.02(a) hereof (or, if not a business day, on the next
business day following such twentieth day), or within two (2) business days
after the Escrow Agent receives any notice to such effect given jointly by
Swingmaster and Subsidiary, the Escrow Agent shall deliver (i) to Swingmaster,
two (2) copies of the Assignment and Assumption of Lease, and (ii) to
Subsidiary, the remainder of the Escrowed Property (provided, however, that
FGC may instruct the Escrow Agent to cancel, rather than deliver, the FGC
Common Stock constituting the Escrowed Property), unless the other party
(i.e., Swingmaster, if Subsidiary was the notifying party, or Subsidiary, if
Swingmaster was the notifying party) shall have notified the Escrow Agent
(with a copy to the party who gave the notice pursuant to Section 1.02(a)) in
writing before such date that such party disagrees with the notifying party's
determination that it is entitled to so unwind the Purchase Agreement, which
notice must be accompanied by a copy of the Consent and Estoppel signed by
Landlord.
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(c) At any time on or after September 13, 1996, Swingmaster
or Subsidiary shall be entitled to give a notice to the Escrow Agent (with a
copy to the other party), to the effect that Landlord has executed and
unconditional delivered the Consent and Estoppel, which notice must be
accompanied by a copy of the Consent and Estoppel signed by Landlord.
(d) Twenty days after the Escrow Agent has received a notice
pursuant to Section 1.02(c) hereof (or, if not a business day, on the next
business day following such twentieth day), or within two (2) business days
after the Escrow Agent receives any notice to such effect given jointly by
Swingmaster and Subsidiary, the Escrow Agent shall deliver (i) to Swingmaster,
(x) 31,519 shares of the Swingmaster Shares and (y) the Escrowed Cash, and
(ii) to Xxxxxx and Price, the Xxxxxx Shares and the Price Shares,
respectively, unless the other party (i.e., Swingmaster, if Subsidiary was the
notifying party, or Subsidiary, if Swingmaster was the notifying party) shall
have notified the Escrow Agent (with a copy to the party who gave the notice
pursuant to Section 1.02(c)) in writing before such date that such party
disagrees with the notifying party's determination that Landlord
unconditionally executed and delivered the Consent and Estoppel.
(e) At any time prior to the first anniversary of the date
of this Agreement, Subsidiary shall be entitled to give a notice to the Escrow
Agent (with a copy to Swingmaster), to the effect that there has been an event
entitling Subsidiary to indemnification from Swingmaster pursuant to the
Purchase Agreement, which notice shall specify the amounts owed by Swingmaster
pursuant to the Purchase Agreement, the calculation of such amounts and the
basis therefore.
(f) Twenty days after the Escrow Agent has received a notice
pursuant to Section 1.02(e) hereof (or, if not a business day, on the next
business day following such twentieth day), or within two (2) business days
after the Escrow Agent receives any notice to such effect given jointly by
Swingmaster and Subsidiary, the Escrow Agent shall deliver to FGC the Escrowed
Property (with the Escrowed Shares being valued as set forth in Section
1.02(d) hereof) in the amounts specified in such notice unless Swingmaster
shall have notified the Escrow Agent (with a copy to Subsidiary) in writing
before such date that Swingmaster disagrees with Subsidiary's determination
that it is entitled to indemnification with respect to the Purchase Agreement,
which notice shall set forth in reasonable detail the basis for such
disagreement.
(g) Should any dispute arise with respect to the delivery,
ownership, or right of possession of the Escrowed Property, the 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 or any part of the
Escrowed Property until such dispute shall have been settled either by mutual
agreement by the parties concerned or by a final order, decree,
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or judgment of a court of competent jurisdiction in the United States of
America and 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 Property
with a court of competent jurisdiction in the United States of America which
is hearing such dispute.
(h) For purposes of this Agreement, the value of each share
of FGC Common Stock which is part of the Escrowed Property shall be deemed
equal to the Current Market Price (as hereinafter defined). The "Current
Market Price" per share of FGC Common Stock shall mean the average of the
daily closing sales price as reported on the NASDAQ Stock Market for the five
consecutive trading days immediately preceding the date of determination.
1.03 DISTRIBUTION OF ESCROWED PROPERTY. Unless a notice under Section
1.02(a), (c) or (e) hereof has been given and Escrowed Property in
satisfaction of such notice has not been delivered in accordance therewith,
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 (and then only to
the extent such Escrowed Property is in dispute or subject to such notice),
the Escrowed Property or such portion of it as at the time remains in escrow,
shall be returned to Swingmaster on the first anniversary of the date of this
Agreement.
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 Property shall be distributed as set forth above.
1.05 VOTING. The Swingmaster Shares held in the Escrow Account shall
be voted by Swingmaster. The Xxxxxx Shares held in the Escrow Account shall be
voted by Xxxxxx. The Price Shares held in the Escrow Account shall be voted by
Price.
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) overnight delivery with proper postage prepaid, and
addressed as follows:
If to FGC or Subsidiary to:
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
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