CASH ESCROW AGREEMENT
CASH ESCROW AGREEMENT, dated as of June ___, 1997 (this "Agreement"),
by and among PALM LAKES PARTNERS, LTD., a Colorado limited partnership having
an address at 0000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000 X, Xxxxxxxxx, Xxxxxxxx 00000
("Seller"), PALM 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 $75,000.00 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.
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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 Chase Manhattan 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 $75,000.00 Escrow Agent shall hold such amount as Escrowed Funds
in the Escrow Account.
(b) 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.
(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
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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 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.
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 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.
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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:
If to Purchaser to:
Palm 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:
Palm 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:
Palm Lakes Partners, Ltd.
0000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000 X
Xxxxxxxxx, Xxxxxxxx 00000
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with a copy to:
Xxxxxx Xxxxxxxx Water & O'Dorisio
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxx X'Xxxxxxx, Xx.
If to Escrow Agent, to:
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention:
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:
3.01 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.
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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 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.
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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, 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
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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 and Seller shall share equally and 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
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performance of its duties hereunder (including reasonable fees, expenses, and
disbursements of its counsel).
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).
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.
PALM FAMILY GOLF CENTERS, INC., a
Delaware corporation
By:
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Name:
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Title:
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PALM LAKES PARTNERS, LTD., a Colorado
limited partnership
By: Palm Lakes Golf, Inc., a Colorado
corporation, its general partner
By:
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Name:
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Title:
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CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By:
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Name:
-----------------------------------
Title:
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