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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
July 20, 1998
FAMILY GOLF CENTERS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-25098 11-3223246
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
538 Broadhollow Road
Melville, New York 11747
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(Address of principal executive offices)
Registrant's Telephone Number, including
area code: (516) 694-1666
Not Applicable
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(Former Address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On July 20 and July 21, 1998, Family Golf Centers, Inc., a Delaware
corporation (the "Company"), acquired all of the issued and outstanding stock
of Golden Bear Golf Centers, Inc. and IMG Properties, Inc. (collectively,
"Golden Bear"), each of which was a wholly-owned subsidiary of Golden Bear
Golf, Inc. ("GBGI"), pursuant to a Stock Purchase Agreement, dated June 16,
1998 (the "Agreement"), by and between the Company and GBGI (the "Golden Bear
Acquisition"). The Company believes that prior to the acquisition, Golden Bear
was the third largest operator of golf driving ranges in North America, with 14
golf centers in California, Florida, Maryland, Michigan, New Jersey, New York,
Ohio, Oregon, Pennsylvania and Texas.
The Company paid $32.0 million in cash for Golden Bear, minus certain
indebtedness, capital leases and other liabilities (currently estimated at $9.0
million), subject to certain post-closing adjustments. In connection with the
Golden Bear Acquisition, the Company borrowed $24.3 million from The Chase
Manhattan Bank under its currently existing credit facility. The $24.3 million
is due October 12, 1998 and bears interest at LIBOR plus 1.00% per annum.
The Company intends to continue operating Golden Bear's business
operations in substantially the same manner as previously conducted.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired: The required
financial statements of Golden Bear are hereby incorporated by reference to the
Company's Registration Statement on Form S-3, dated May 22, 1998 as amended by
Amendment No. 1 to the Registration Statement on Form S-3/A, dated July 2,
1998, and Amendment No. 2 to the Registration Statement on Form S-3/A, dated
July 21, 1998 and to the Company's Registration Statement on Form S-3 dated
July 22, 1998.
(b) Pro Forma Financial Information: The required pro forma
financial statements of Golden Bear are hereby incorporated by reference to the
Company's Registration Statement on Form S-3, dated May 22, 1998 as amended by
Amendment No. 1 to the Registration Statement on Form S-3/A, dated July 2,
1998, and Amendment No. 2 to the Registration Statement on Form S-3/A, dated
July 21, 1998 and to the Company's Registration Statement on Form S-3, dated
July 22, 1998.
(c) Exhibits:
2.1 The Agreement is incorporated by reference to the
Company's Current Report on Form 8-K, dated
June 16, 1998.
2
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2.2 Amendment No. 3 to the Agreement, dated July 20, 1998,
between the Company and GBGI.
(a) Form of Escrow Agreement.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
July 31, 1998
FAMILY GOLF CENTERS, INC.
By: /s/ Pamela S. Charles
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Pamela S. Charles,
Vice President and Secretary
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INDEX TO EXHIBITS
Exhibit No. Description
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2.1 The Agreement is incorporated by reference to the Company's
Current Report on Form 8-K, dated July 16, 1998.
2.2 Amendment No. 3 to the Agreement, dated July 20, 1998, between
the Company and GBGI.
2.2(a) Form of Escrow Agreement.
5
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AMENDMENT No. 3, dated July 20, 1998 (the "Amendment"), between Family
Golf Centers, Inc., a Delaware corporation ("Buyer"), and Golden Bear Golf,
Inc., a Florida corporation ("Seller").
WHEREAS, Buyer and Seller have entered into a Stock Purchase Agreement,
dated as of June 16, 1998 (as amended, the "Agreement"), pursuant to which
Buyer has agreed to sell to Seller, and Seller has agreed to purchase from
Buyer, all of the outstanding capital stock of Golden Bear Golf Centers, Inc.,
a Florida Corporation ("GBGC"). (All capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the
Agreement. Unless otherwise indicated, references to Sections will be to
Sections in the Agreement.)
WHEREAS, IMG Properties, Inc., a Michigan corporation ("IMG"), is
currently a wholly-owned subsidiary of GBGC.
WHEREAS, Seller has been unable to obtain the consent of the City of
Royal Oak, Oakland County, Michigan to the transfer of a certain Ground Lease
(the "Royal Oak Lease"), dated August 19, 1987, as amended, between the City of
Royal Oak and GBGC (the "Royal Oak Consent").
WHEREAS, the parties wish to amend the Agreement to provide for the
spin-off by GBGC prior to the Closing of IMG to Seller and the subsequent sale
by Seller to Buyer of all of the outstanding capital stock of IMG upon
obtaining the Royal Oak Consent.
NOW, THEREFORE, the parties hereto agree as follows:
1. Spin-Off of IMG. Prior to the Closing Date, GBGC will (a) assign all
of its right, title and interest in the Royal Oak Lease to IMG, (b) contribute,
transfer and assign to IMG all of its right, title and interest in and to all
properties and assets relating solely and specifically to the business
conducted by GBGC at the facilities situated in the City of Royal Oak, Oakland
County, Michigan (collectively, the "Royal Oak Facility"), (c) transfer and
assign to IMG any and all outstanding and future obligations and liabilities of
GBGC relating to the Royal Oak Facility and the business conducted by GBGC
and/or IMG thereat, and (d) distribute all of the issued and outstanding stock
of IMG to Seller (the "IMG Spin-Off"), all upon such terms and conditions, and
pursuant to documentation, satisfactory to Buyer.
2. Purchase Price Adjustment. In addition to the other adjustments to be
made to the purchase price for GBGC pursuant to the Agreement, the purchase
price shall be reduced by $3.0 million relating to the IMG Spin-Off. Buyer
agrees to pay $753,333.40, representing a note payable to Dallas Highlander,
Ltd. in the amount of $750,000 plus accrued interest, which will be paid by
Buyer at Closing.
3. The Sale of IMG. Upon the terms and subject to the conditions of this
Amendment, (a) Seller shall sell, transfer and assign to Buyer all of Seller's
right, title and interest in and to 1,000 shares (the "IMG Shares") of the
common stock, without par value, of IMG representing all of the issued and
outstanding capital stock of IMG, and (b) Buyer shall pay an amount equal to
$2.65
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million in cash representing $3.0 million less a $350,000 note payable to
Andrew A. Giovannetti, which note will be assumed by Buyer at the IMG Closing
(as defined). All other liabilities transferred to IMG by GBGC in connection
with the IMG Spin-Off shall be deemed to be liabilities of GBGC solely for the
purpose of calculating GBGC's Closing Date Liabilities and GBGC's Working
Capital Deficiency and the preparation of the Estimate Certificate, but for no
other purpose. However, if the IMG Closing does not occur, Seller shall receive
an appropriate credit for such liabilities in connection with any final
adjustment to the purchase price for the shares of GBGC. The purchase price for
the shares of IMG shall be deposited in an escrow account with United States
Trust Company of New York (the "Escrow Agent") pursuant to an escrow agreement
(the "IMG Escrow Agreement") in the form of Exhibit A hereto among Buyer,
Seller and the Escrow Agent.
4. IMG Closing. Subject to the terms and conditions of the Agreement as
amended hereby, and provided all other conditions to closing set forth in the
Agreement as amended hereby have been fulfilled or waived, the closing of the
sale of the IMG shares (the "IMG Closing") shall take place (a) at the offices
of Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York,
New York 10176 at 10:00 a.m. on the first business day after the Royal Oak
Consent is obtained; or (b) at such other place, time, and/or date upon which
the parties hereto may otherwise agree. At the IMG Closing, upon delivery of
the items set forth in Paragraph 5 hereof, Buyer and Seller shall send joint
written instructions to the Escrow Agent instructing it to release the funds
held in Escrow to Seller less an amount equal to the difference between
interest earned on the escrowed funds and Buyer's cost of capital relating to
such funds which amount shall be returned to Buyer. The date upon which the IMG
Closing shall occur is referred to herein as the "IMG Closing Date."
5. Conditions to Obligation to Effect the Sale and Deliveries at the IMG
Closing. The obligations of Buyer to effect the sale of the IMG Shares shall be
subject to the fulfillment at or prior to the IMG Closing date of the following
conditions: (a) no action shall have been taken, and no statute, rule,
regulation, executive order, judgment, decree, or injunction (other than a
temporary restraining order) shall have been enacted, entered, promulgated or
enforced (and not repealed, superseded, lifted or otherwise made inapplicable),
by any court of competent jurisdiction or governmental authority which
restrains, enjoins or otherwise prohibits the consummation of the transactions
contemplated hereby, (b) to the extent required, all necessary regulatory and
governmental approvals and consents shall have been obtained, and (c) Seller
shall deliver or cause to be delivered to Buyer the following: (i) certificates
evidencing the IMG Shares to be sold, assigned and transferred to Buyer,
including stock powers or other necessary instruments duly executed
transferring all right, title and interest to the IMG Shares to Buyer; (ii) the
certificates and opinions relating to IMG in the forms, and addressing the
matters addressed by, the certificates and opinions delivered by Seller at the
Closing; (iii) the Royal Oak Consent, any other commitments and consents
relating to IMG contemplated and required by Section 6.3(d) of the Agreement
and, to the extent not previously delivered, copies of all other consents,
approvals and waivers required as a condition precedent to the IMG Closing;
(iv) the resignations of such officers and directors of IMG as Buyer shall have
requested; and (v) the originals of deeds, easements, franchises, licenses,
contracts and other documents described herein and such keys access codes,
books and records and other items as are necessary for Buyer to enjoy the
ownership of IMG.
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6. Representations and Warranties of Seller. All of the representations
and warranties of Seller set forth in Article IV of the Agreement remain in
full force and effect. In addition, Seller represents and warrants that: (i)
except for IMG, GBGC does not have any Subsidiaries; and (ii) at the Closing
and the IMG Closing, Seller will have valid title to all of the IMG Shares to
be sold and transferred to Buyer by Seller at the IMG Closing and such IMG
Shares shall be free and clear of any lien, claim, charge, security interest,
voting agreement, proxy or encumbrance.
7. Covenants. Seller shall continue to abide by and shall cause IMG to
abide by all of the covenants contained in Article V of the Agreement. For
purposes of this Amendment, references to GBGC in said Article V shall mean and
shall include references to IMG, references to the Closing Date shall mean and
include the IMG Closing Date, and references to the sale of GBGC shall mean and
include the sale of IMG as contemplated by this Amendment.
8. Termination. The sale of the IMG Shares contemplated hereby may be
abandoned, by written notice promptly given to the other parties hereto, at any
time prior to the IMG Closing Date, (i) in accordance with the terms of Section
7.1.1, 7.1.2, 7.1.3, 7.1.4, 7.1.5 of the Agreement, or (ii) at the option of
Buyer, if the IMG Closing Date shall not have occurred on or before August 19,
1998; provided, that, if the IMG Closing shall not have occurred by August 19,
1998 by reason that the Royal Oak Consent has not be obtained by such date,
Buyer shall not have the right to abandon the sale of the IMG Shares
contemplated hereby pursuant to this clause (ii) until September 18, 1998 so
long as Seller is continuing to use its best efforts to obtain the Royal Oak
Consent. For purposes of this Amendment, references to this Agreement in such
Sections shall be deemed to be references to the Agreement or this Amendment
and reference to GBGC Material Adverse Effect in Section 7.1.4 shall be deemed
to mean a material adverse effect on the business, results of operations or
financial condition of IMG.
9. Effect of Termination. In the event of the abandonment of the sale of
the IMG Shares as provided in Paragraph 10 hereof, there shall be no liability
on the part of Buyer or Seller, except as otherwise set forth in the Agreement
and except to the extent that such termination results from the willful breach
of a party hereto of any of its representations, warranties, covenants or
agreements set forth in the Agreement or this Amendment.
10. Indemnification. (a) Notwithstanding anything to the contrary
contained in the Agreement or this Amendment, all indemnification provisions
contained in Article VIII, as amended by Amendment Number 2, dated July 6,
1998, of the Agreement will apply and remain in full force and effect. In
addition, (i) after the IMG Closing Date, Seller shall indemnify and hold
harmless Buyer, GBGC, IMG and each of their respective successors and assigns
from and against any Tax liability attributable to or otherwise caused by the
IMG Spin-Off, and (ii) if the IMG Closing does not occur, Seller shall
indemnify Buyer, GBGC and their respective successors and assigns from and
against any and all third party claims relating to liabilities of GBGC
transferred to IMG in connection with the IMG Spin-Off. In addition, if the IMG
Closing does not occur, Seller shall reimburse Buyer for any and all amounts
expended by GBGC in respect of liabilities incurred by GBGC in connection with
the Royal Oak Facility which by their nature can not be transferred to IMG
(including, by way of example, and not by way of limitation, indebtedness
incurred by GBGC in connection with the purchase of, improvements to, and the
operation of, the Royal Oak Facility).
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(b) The parties acknowledge that GBGC is currently in possession of
certain miniature golf holes manufactured for GBGC by Foam Technology ("FT")
for use at GBGC's Toms River, New Jersey facility. The parties agree that if,
subsequent to the Closing, GBGC determines to use such holes, it shall be
responsible for making payment therefor to FT. If, however, GBGC determines in
its sole discretion not to use such holes, it shall deliver such holes to
Seller who shall be responsible for making payment therefor to FT and shall
indemnify Buyer and GBGC from and against any liabilities, costs and expenses
relating thereto (which indemnification shall not be subject to the $75,000
basket set forth in Section 8.2(iii) of the Agreement).
(c) Buyer shall indemnify and hold harmless, Seller and Golden Bear
International, Inc. ("GBI") and each of their respective successors and assigns
from and against any and all liabilities incurred by Seller or GBI, as the case
may be, in connection with the following: (i) Lease Guaranty, dated as of
September 9, 1996, made by Seller in favor of Sugar Creek Golf Course, Inc.,
(ii) Term Lease Master Agreement, dated March 5, 1998, between Seller and IBM
Credit Corporation, and (iii) Guaranty Agreement, dated July 29, 1996, made by
GBI in favor of National City Bank of Pennsylvania.
11. Except as amended hereby and by the Amendments dated June 29, 1998
and July 6, 1998, the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have signed this amendment as of this
20th day of July, 1998.
FAMILY GOLF CENTERS, INC.
By: /s/ Robert J. Krause
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Name: Robert J. Krause
Title: Senior Vice President
GOLDEN BEAR GOLF, INC.
By: /s/ Stephen S. Winslett
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Name: Stephen S. Winslett
Title: Senior Vice President
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ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of July 20, 1998, among Family Golf
Centers, Inc., a Delaware corporation with executive offices at 538 Broadhollow
Road, Melville, New York 11747 (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
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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
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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.
538 Broadhollow Road
Melville, New York 11747
Tel: (516) 694-1666
Fax: (516) 694-0918
with a copy to:
Squadron, Ellenoff, Plesent & Sheinfeld, LLP
551 Fifth Avenue
New York, New York 10176
Attention: Kenneth R. Koch, Esq.
Tel: (212)-661-6500
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Fax: (212)-697-6686
If to Parent to:
Golden Bear Golf, Inc.
11780 U.S. Highway One
North Palm Beach, Florida
Attention: Richard P. Bellinger
Tel: (561) 626-3900
Fax: (561) 626-5335
with a copy to:
Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson
Museum Tower, Suite 2400
150 West Flagler Street
Miami, Florida 33130
Attention: Steven D. Rubin, Esq.
Tel: (305) 789-3200
Fax: (305) 789-3395
If to the Escrow Agent, to:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: John Guiliano
Tel: (212) 852-1613
Fax: (212) 852-1626
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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<PAGE>
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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<PAGE>
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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<PAGE>
EXHIBIT A
ESCROW AGENT FEES:
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