ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of July 20, 1998, among Family Golf
Centers, Inc., a Delaware corporation with executive offices at 000 Xxxxxxxxxxx
Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Company"), Golden Bear Golf, Inc, a
Florida corporation ("Parent"), and United States Trust Company of New York,
incorporated under the laws of the United States of America (the "Escrow
Agent").
W I T N E S E T H:
WHEREAS, the Company and Parent have entered into a Stock Purchase
Agreement, dated as of June 16, 1998 (as amended, the "Agreement"), pursuant to
which Parent is selling all of the issued and outstanding stock of Golden Bear
Golf Centers, Inc. ("GBGC") to the Company for cash;
WHEREAS, the Company and Parent have entered into an Amendment Number
3 to the Agreement, dated July 30, 1998 (the "Amendment"), pursuant to which
Parent is selling all of the issued and outstanding stock (the "IMG Shares") of
IMG Properties, Inc. ("IMG") to the Company for cash;
WHEREAS, pursuant to Paragraph 3 of the Amendment, the purchase price
of $3.0 million, less $350,000 representing a note payable, for the IMG Shares
is required to be placed into an escrow
account (the "Escrow Account") to be maintained by the Escrow Agent pending the
closing of the sale of the IMG Shares; and
WHEREAS, this is the Escrow Agreement referred to in Paragraph 3 of
the Amendment. Capitalized terms used in this Escrow Agreement and not
otherwise defined herein shall have the respective meanings given to them in
the Amendment.
NOW, THEREFORE, it is agreed as follows:
I. ESCROW.
SECTION 1.01 APPOINTMENT OF ESCROW AGENT. The parties hereto hereby
appoint the Escrow Agent, and the Escrow Agent hereby agrees to serve, as
Escrow Agent in accordance with, and pursuant to, the Amendment.
SECTION 1.02 OPERATION OF ESCROW ACCOUNT. The parties hereto agree
that, subject to Section 1.03 hereof, the Escrow Account (as hereinafter
defined) shall operate as follows:
(a) At the Closing Date, the Company shall deposit into an
escrow account (the "Escrow Account") $2.65 million (together with any interest
or other income therein, the "Escrowed Property"), pursuant to the Amendment.
(b) If at any time after the date hereof until (i) August 19,
1998, or (ii) such later date as the Company and Parent shall jointly notify
the Escrow Agent in writing (the applicable date set forth in clause (i) or
clause (ii) being referred to herein as the "Escrow Termination Date") the
Company and Parent shall give a joint notice to the Escrow Agent, signed by the
President or any Vice President of each party, to such effect that the closing
conditions for the IMG Closing have been satisfied, which notice shall specify
the portion of the Escrowed Property to be paid to Parent and the Company and
shall contain instructions for delivery thereof in accordance with Paragraphs
3 and 4 of the Amendment. The Escrow Agent shall deliver the Escrowed Property
in accordance with said instructions. If the Escrow Agent has not received any
such notice prior to the close of business on the Escrow Termination Date,
unless the Escrow Agent has received such instructions from Parent and the
Company to the contrary, the Escrow Agent shall deliver the Escrowed Property
to the Company in accordance with the Company's instructions for delivery.
(c) Should any dispute arise with respect to the delivery,
ownership, or right of possession of the Escrowed Property, the Escrow Agent 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, or judgment of the Arbitrator or 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.
SECTION 1.03 TERMINATION OF ESCROW ACCOUNT. This Escrow 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.
SECTION 1.04 INVESTMENT. The Escrow Agent shall invest the Escrowed
Property in a manner to be mutually agreed upon by the parties, provided,
however, that if the parties do not so agree within one (1) business day of the
Closing Date, the Escrow Agent shall invest the Escrowed Property in the
Excelsior Government Money Fund. Without limiting the provisions of paragraph
IV(c) hereof, the Escrow Agent shall in no event be liable in connection with
its investment or
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reinvestment of any Escrowed Property, in accordance with the terms hereof,
other than any liability incident to any delays resulting from the Escrow
Agent's gross negligence, willful misconduct or breach of the Escrow Agreement
or any loss of interest incident to any such delays.
SECTION 1.05 INTEREST. All interest or other income on the Escrowed
Property shall become Escrowed Property.
II. DEPOSIT OF ESCROWED PROPERTY.
SECTION 2.01 DEPOSIT OF ESCROWED PROPERTY. At the Closing Date, the
Company shall, as set forth in Section 1.02, deposit with the Escrow Agent
$2.65 million.
III. 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, or (c)
sent by over-night delivery or (d) sent by facsimile (with confirmation or
receipt) and addressed as follows:
If to the Company to:
Family Golf Centers, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Tel: (000)-000-0000
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Fax: (000)-000-0000
If to Parent to:
Golden Bear Golf, Inc.
00000 X.X. Xxxxxxx Xxx
Xxxxx Xxxx Xxxxx, Xxxxxxx
Attention: Xxxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Stearns, Weaver, Miller, Weissler, Xxxxxxxx & Xxxxxxxxx
Museum Tower, Suite 2400
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Escrow Agent, to:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (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.
IV. CONCERNING THE ESCROW AGENT.
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To induce the Escrow Agent to act hereunder, it is further agreed by
the Company and Parent that:
(a) The Escrow Agent shall not be required to invest any
funds held hereunder except as directed in this Escrow Agreement.
(b) This Escrow 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 Escrow 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 Escrow Agreement.
(c) 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 Escrow
Agreement. The Escrow Agent shall have a lien of the amount of any such expense
or loss on the Escrowed Property held by it hereunder and shall be entitled to
reimburse itself from such Escrowed Property for the amount of any such expense
or loss agreed upon by the parties or pursuant to a court order. This paragraph
(c) and paragraphs (f) and (e) of this Article IV shall survive notwithstanding
any termination of this Escrow Agreement or the resignation of the Escrow
Agent.
(d) 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
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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.
(e) The 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.
(f) The Escrow Agent does not have any interest in the
Escrowed Property 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 applicable United States or other
taxes.
(g) 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.
(h) 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.
(i) 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 Parent and the Company or at
any time may resign by giving five (5) days written notice to such effect to
Parent and the Company. Upon any such termination or resignation, the Escrow
Agent shall deliver the Escrowed Property to any successor escrow agent jointly
designated by the
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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 Escrow Agreement. The termination or resignation of the Escrow Agent
shall take effect on the earlier of (A) the appointment of a successor
(including a court of competent jurisdiction) or (B) the Escrow Agent's
delivery of the Escrowed Property to a court of competent jurisdiction in
accordance with paragraph (i) of this Article IV.
(j) The Escrow Agent shall deliver to the parties monthly
statements of the balance in the Escrow Accounts and the amount subject to
claims.
(k) 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 Property, 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 Property until the Escrow Agent
shall have received (A) a final and non-appealable order of the Arbitrator or a
court of competent jurisdiction directing delivery of the Escrowed Property or
(B) a written agreement executed by the other parties hereto directing delivery
of the Escrowed Property, in which event the Escrow Agent shall disburse the
Escrowed Property in accordance with such order or agreement. The Escrow Agent
shall act on such court order and legal opinions without further question.
(l) As consideration for its agreement to act as Escrow Agent
as herein described, Parent and the Company shall each pay the Escrow Agent 50%
of the 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, Parent and the Company each agree to reimburse the Escrow Agent for
50% of all reasonable expenses, disbursements, and advances incurred or made by
the Escrow Agent in
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performance of its duties hereunder (including reasonable fees, expenses, and
disbursements of its counsel).
(m) 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.
V. MISCELLANEOUS.
SECTION 5.01 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 paragraph (i) of Article IV 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 which consent shall not be unreasonably withheld.
SECTION 5.02 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 5.03 MODIFICATION. This Agreement may only be modified by a
writing signed by all of the parties hereto.
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SECTION 5.04 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 5.05 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.
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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:
-----------------------------
NAME:
TITLE:
GOLDEN BEAR GOLF, INC.
BY:
-----------------------------
NAME:
TITLE:
UNITED STATES TRUST COMPANY OF
NEW YORK
BY:
-----------------------------
NAME:
TITLE:
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EXHIBIT A
ESCROW AGENT FEES:
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