CASH ESCROW AGREEMENT
CASH ESCROW AGREEMENT, dated as of September 30, 1996 (this
"AGREEMENT"), by and among USA GOLF CENTERS, LTD. #2, having an address at c/o
Hackett Management Corporation, #3 Xxxxx Xxxxxxx Xxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000 ("SELLER"), WESTMINSTER 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 S E T H:
WHEREAS, simultaneously with the execution hereof, Seller and
Purchaser are consummating the transactions contemplated by the 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 $50,000 into an escrow account to be maintained by Escrow Agent to be
held against any claims for indemnity under Article 14 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.
1.01 APPOINTMENT OF ESCROW AGENT.
(a) 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.
(b) Escrow Agent shall establish at Chemical Bank a separate Federally
insured, interest bearing account (the "ESCROW ACCOUNT") for any amounts
received by it hereunder.
(c) 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".
(d) Seller shall be responsible for the payment of any income taxes
payable in connection with any interest earned in the Escrow Account except
with respect to any interest on Escrowed Funds paid to or for the benefit of
Purchaser.
1.02 OPERATION OF ESCROW ACCOUNT. The parties hereto agree that the
Escrow Account shall operate as follows:
(a) At the Closing, Seller shall deliver or cause to be
delivered to Escrow Agent $50,000. Escrow Agent shall hold such amount as
Escrowed Funds in the Escrow Account.
(b) At any time prior to the six-month anniversary of
the Closing Date,
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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 Section 14.1 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.
(c) Twenty (20) days after Escrow Agent has received a notice
pursuant to Section 1.02(b) 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.
(d) Should any dispute arise with respect to the delivery,
ownership, or right of possession of any of the Escrowed Funds, 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
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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.
1.03 DISTRIBUTION OF ESCROWED FUNDS. Unless a notice under Section
1.02(b) 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 remains
in escrow, together with all dividends and distributions received by Escrow
Agent with respect thereto, shall be returned to Seller on the six month
anniversary of the Closing Date.
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 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:
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If to Purchaser to:
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller to:
Xxxxxxx Management Corporation
#0 Xxxxx Xxxxxxx Xxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx & Boortz
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (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.
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3. CONCERNING ESCROW AGENT.
To induce Escrow Agent to act hereunder, it is further agreed by each
of Seller and Purchaser that:
3.01 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.
3.02 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.
3.03 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 (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,
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 from gross negligence or willful misconduct) in the
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investment or reinvestment of the Escrowed Funds, or any loss of interest
incident to any such delays. This Section 3.03 shall survive notwithstanding
any termination of this Agreement or the resignation of Escrow Agent.
3.04 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.
3.05 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.
3.06 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 3.06 shall survive
notwithstanding any termination of this Agreement or the resignation of Escrow
Agent.
3.07 Escrow Agent makes no representation as to the validity,
value, genuineness,
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or the collectibility of any security or other documents or instrument held
by, or delivered to, it.
3.08 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.
3.09 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 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 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
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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
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, on the one hand, and Seller, on the other hand,
agrees to share equally Escrow Agent's fees determined in accordance with the
terms set forth on Exhibit
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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).
3.13 No publicly distributed material or other matter in any language
(including, without limitation, notices and reports) which mentions Escrow
Agent's name or the rights, powers, or duties of Escrow Agent shall be issued
by the other parties hereto or on such parties' behalf unless Escrow Agent
shall first have given its specific written consent thereto.
4. MISCELLANEOUS.
4.01 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 Section 3.09 hereof with respect to the termination of,
or resignation by, Escrow Agent. No party may assign any of its rights or
obligations under this Agreement without the written consent of the other
parties.
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).
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4.03 MODIFICATION. This Agreement may only be modified by a writing
signed by all of the parties hereto.
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.
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.
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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.
WESTMINSTER FAMILY GOLF CENTERS,
INC.
By: __________________________________
Name:
Title:
USA GOLF CENTERS, LTD. #2
By: Xxxxxxx Management Corporation, a
California corporation as its General
Partner
By: ___________________________________
Name: Xxxxx X. Xxxxxxx
Title: President
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: __________________________________
Name:
Title:
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