ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of December 30, 1996, among FAMILY GOLF
CENTERS, INC., a Delaware corporation with executive offices at 000
Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("FGC"), CINCINNATI GOLF ACADEMY,
LTD. an Ohio limited liability company, having an address at 0000 Xxxxxxxx
Xxxx, Xxxxxxxxxx, Xxxx 00000 (the "Seller") 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 E T H:
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WHEREAS, simultaneously with the execution hereof, the Seller and
Maineville Family Golf Centers, Inc., a Delaware corporation (the "Purchaser")
are consummating the transactions contemplated by the Purchase Agreement,
dated as of December 30, 1996 (the "Purchase Agreement"), among the Seller,
certain members of the Seller, and Purchaser pursuant to which, among other
things, the Purchaser is purchasing certain assets of the Seller; and
WHEREAS, pursuant to Section 2 of the Purchase Agreement, 3,500 shares
(the "Escrowed Property") of the 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 Purchase Agreement; and
WHEREAS, this is the Escrow Agreement referred to in Section 1 of 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:
I. ESCROW.
SECTION 1.01 APPOINTMENT OF ESCROW AGENT. The Seller 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) As soon as reasonably practicable following the Effective Time,
FGC shall deposit, in accordance with Section 1.03 hereof, into the Escrow
Account an aggregate of 3,500 shares of FGC Common Stock pursuant to the
Purchase Agreement.
(b) At any time prior to December 30, 1998, FGC shall be entitled to
give a notice to the Escrow Agent, signed by its President or any Vice
President (with a copy to the Seller), to the effect that there has been an
event entitling Purchaser to indemnification from the Seller pursuant to the
Purchase Agreement, which notice shall specify the amounts owed by the Seller
pursuant to the Purchase Agreement, the calculation of such amounts and, in
reasonable detail, the basis therefore.
(c) Twenty days after the Escrow Agent has received a notice
pursuant to
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Section 1.02(b) (or, if not a business day, on the next business day following
such twentieth day) it shall deliver to FGC the Escrowed Property (the
"Escrowed Property") to be valued as set forth in Section 1.02(e) in the
amounts specified in such notice unless the Seller shall have notified the
Escrow Agent (with a copy to FGC) in writing before such date that it
disagrees with FGC's determination that it is entitled to indemnification with
respect to the Purchase Agreement, which notice shall be set forth in
iasonable detail the basis for such disagreement.
(d) 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 IV(xi), 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
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.
(e) 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
$30.00 per share.
(f) In the event that an indemnification claim is made by the
Purchaser in accordance with Section 1.02(b) hereof and such claim is not
disputed by the Seller within the 20-day period referred to in Section 1.02(c)
hereof, then the Seller shall have the right to satisfy such indemnification
claim in cash rather than in FGC Common Stock being held by the Escrow Agent
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provided that such amount is paid to Purchaser within such 20-day period.
SECTION 1.03 DISTRIBUTION OF ESCROWED PROPERTY. Unless a notice under
Section 1.02(b) has been given and Escrowed Property 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 Property 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 Seller on
December 30, 1998.
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 shares of FGC Common Stock contained therein shall be
distributed as set forth above.
SECTION 1.05 VOTING. The shares of FGC Common Stock held in the Escrow
Account shall be voted by the Seller or its designees.
II. DEPOSIT OF ESCROWED PROPERTY.
SECTION 2.01 DEPOSIT OF ESCROWED PROPERTY. As soon as reasonably
practicable following the Closing Date (as defined in the Purchase Agreement),
FGC shall, as set forth in Section 1.02, deposit with the Escrow Agent 3,500
shares of FGC Common Stock.
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 and addressed as follows:
If to FGC to:
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000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
(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
Fax: (000)-000-0000
If to Seller to:
Cincinnati Golf Academy, Ltd.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxx, Xxxxxxxxx & Xxxxxx
000 Xxxx 0xx Xxxxxx
0xx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Escrow Agent, to:
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
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
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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.
To induce the Escrow Agent to act hereunder, it is further agreed by each
of the Seller and FGC that:
(i) The Escrow Agent shall not be under any duty to give the
Escrowed Property 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.
(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.
Without limiting the foregoing, the Escrow Agent shall in no event be liable
in connection with its investment or reinvestment of any cash held by it
hereunder in
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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.
(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 Escrow 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
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 paragraph (vi) and paragraph (iii) of this Article V 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
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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 FGC and the Seller or at any time may
resign by giving written notice to such effect to FGC and the Seller. Upon any
such termination or resignation, the Escrow Agent shall deliver the Escrowed
Property 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 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 day that is 30 days
after the date of delivery: (1) to the Escrow Agent of the other parties'
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 Property 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) T 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
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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 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 rtoain the Escrowed Property 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 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. 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 Escrow
Agreement as if herein set forth). In addition, FGC and the Seller 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'
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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 (ix) of Article V 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 5.02 CHOICE OF LAW. This Agreement shall be construed in
accordance with, and governed by, the internal law of the State of Delaware
(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.
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:
CINCINNATI GOLF ACADEMY, LTD.
.
BY:_________________________________
NAME:
TITLE:
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
BY: ________________________________
NAME:
TITLE:
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EXHIBIT A
ESCROW AGENT FEES: $100.00 PER MONTH
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