ESCROW AGREEMENT
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ESCROW AGREEMENT, dated as of July 25, 1997 (this "Agreement"), by and
among THREE GROVE PARTNERS, a New York limited partnership having an address at
c/o Xxxxxx X. Xxxxxx, Xx., 00 Xxxxxx Xx., Xxxxxx Xxxxx, Xxx Xxxx 00000
("Seller"), FAMILY GOLF CENTERS, INC., a Delaware corporation having an address
at 000 Xxxxxxxxxxx Xxxx, Xxxxx 000X, Xxxxxxxx, Xxx Xxxx 00000 ("Purchaser"),
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 (together with its successors, the "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 Asset Purchase
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 into an escrow account to be maintained by Escrow Agent to be
held against any claims for indemnity under Article 11 of the Purchase
Agreement; 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.
1.1 Appointment of Escrow Agent.
1.1.1 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.
1.1.2 Escrow Agent shall establish a separate Federally insured,
interest bearing account (the "Escrow Account") for any
amounts received by it hereunder.
1.1.3 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".
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1.1.4 Seller shall be responsible for the payment of any income
taxes payable in connection with any interest earned in
the Escrow Account.
1.2 Operation of Escrow Account. The parties hereto agree that the
Escrow Account shall operate as follows:
1.2.1 At the Closing, 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.
1.2.2 At any time prior to the one (1) year anniversary of the
Closing Date (the "Escrow Period"), Purchaser shall be
entitled to give a notice to Escrow Agent, 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 11 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.
1.2.3 Twenty (20) days after Escrow Agent has received a notice
pursuant to Section 1.2.2 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.
1.2.4 Should any dispute arise 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 or 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 has 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.
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1.3 Distribution of Escrowed Funds. Unless a notice under Section
1.2.2 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 remain in
escrow and is not in dispute, together with all dividends and
distributions received by Escrow Agent with respect thereto,
shall be returned to Seller on the first anniversary of the
Closing Date.
1.4 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 Funds contained in the
Escrow Account shall be distributed as set forth 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, 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:
Three Grove Partners
c/o Xxxxxx X. Xxxxxx, Xx.
00 Xxxxxx Xx.
Xxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Ruskin, Moscou, Xxxxx & Faltischek
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to Escrow Agent, to:
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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 each of Seller and Purchaser that:
3.1 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.
3.2 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.
3.3 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 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
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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 shall survive
notwithstanding any termination of this Agreement or the
resignation of Escrow Agent.
3.4 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. 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.
3.5 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.
3.6 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 shall survive notwithstanding any
termination of this Agreement or the resignation of Escrow Agent.
3.7 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.
3.8 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.
3.9 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 deliver the Escrowed Funds 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 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
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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, Purchaser shall pay 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.
4.1 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
3.9 hereof with respect to the termination of, or resignation by,
Escrow Agent. No party may assign
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any of its rights or obligations under this Agreement without
the written consent of the other parties.
4.2 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).
4.3 Modification. This Agreement may only be modified by a writing
signed by all of the parties hereto.
4.4 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.
4.5 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.
[SIGNATURE PAGE BEGINS ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the day and year first above written.
FAMILY GOLF CENTERS, INC.
By:
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Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
THREE GROVE PARTNERS
By: Grayside Partners, Inc., a
New York corporation, general
partner
By:
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Name: Xxxxxx X. Xxxxxx Xx.
Title: President
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By:
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Name:
Title:
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