CUSTODY AGREEMENT AND IRREVOCABLE POWER OF ATTORNEY
Xxxxxx X. Xxxx/Xxxxxx X. Xxxxxxxxx
0 Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Gentlemen:
U.S. Golf & Entertainment Inc., a Delaware corporation (the "Company"),
has filed a Registration Statement with the Securities and Exchange Commission
("SEC") to register for sale (the "IPO") to the public under the Securities Act
of 1933, as amended (the "Offering"), up to 1,265,000 shares of Common Stock
owned by the Company and up to 700,000 shares of the Company's Common Stock (the
"Common Stock"), to be issued by the undersigned and the other persons listed on
Annex A hereto.
I. Appointment As Custodian.
There are delivered herewith to you as Custodian a certificate or
certificates for _____________ shares of the Company's Common Stock, $.01 par
value per share (the "Shares"). Each such certificate so delivered is in
negotiable and proper deliverable form accompanied by a duly executed stock
power or powers (which may be in the form of Annex B attached hereto), bearing
the signature of the undersigned endorsed thereon and guaranteed by a commercial
bank or trust company or by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. These
certificates are hereby deposited with you to be held by you as Custodian for
the account of the undersigned and are to be disposed of by you in accordance
with this Custody Agreement/Irrevocable Power of Attorney.
Simultaneously with my execution of this Agreement, persons owning a
total of __________ shares of Common Stock ("Other Selling Stockholders") are
signing identical agreements (all such agreements called "Agreements").
At your expense, the undersigned agrees to deliver to you such
additional documentation as you or the Company (or any broker) may reasonably
request to effectuate or confirm compliance with any of the provisions hereof.
If the Shares have not been sold prior to a date which is the second
anniversary of the effective date of the Registration Statement relating to the
IPO (the "Termination Date") then, upon the written request of the undersigned
to you on or after that date, you are to return to the undersigned the
certificates for the Shares deposited with you for the purposes of this Custody
Agreement, together with any stock powers delivered with the certificates, as
the case may be.
II. Irrevocable Appointment as Attorneys; Powers
The undersigned hereby irrevocably constitutes and appoints Xxxxxx X.
Xxxx and Xxxxxx X. Xxxxxxxxx, acting jointly, the true and lawful
attorneys-in-fact (the "Attorneys") of the undersigned up to and through the
Termination Date, with full power in the name of, for and on behalf of the
undersigned with respect to all matters arising in connection with the sale of
the Shares by the undersigned including, but not limited to, the power and
authority to take any and all of the following actions:
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(1) To sell, assign, transfer and deliver up to the number of
Shares set forth herein at a sale price which provides the undersigned with net
proceeds of $2.90 per Share and which provides for proceeds in excess of $2.90
per Share to be delivered to the Company;
(2) For the purpose of effecting such sale, to negotiate, enter
into, execute, deliver such agreements and perform such actions and to determine
when, how many and which of the Shares shall be sold;
(3) To endorse, transfer and deliver the certificates for the
Shares to the Company's transfer agent or to any broker involved in effecting
the sale of the Shares and to give such orders and instructions with respect to
(i) the transfer on the books of the Company of the Shares in order to effect
such sale (including the names in which new certificates are to be issued and
the denominations thereof), (ii) the delivery of the certificates for the Shares
against receipt by you of the purchase price to be paid therefor, (iii) the
return to you, on behalf of the undersigned, of new certificates representing
the number of shares of Common Stock, if any, represented by certificates
deposited with you which are in excess of the number of Shares sold, (iv) the
deposit by you of the proceeds of $2.90 per Share in a non-interest bearing
escrow account and the distribution of all monies deposited therein pursuant to
the Agreements on a periodic basis of at least every 90 days to the undersigned
and to all of the Other Selling Stockholders, such distribution to be
proportional to the undersigned and the Other Selling Stockholders based upon
the percentage obtained by dividing the shares of Common Stock deposited with
you by each person with total number of Shares deposited with you by the
undersigned and the Other Selling Stockholders, it being the intention that each
person depositing Shares with you will receive their equitable proportion of the
total proceeds received from the sale of all Shares, up to a maximum of $2.90
per share, regardless of whether their particular shares are sold pursuant to
the Agreements, and (v) the delivery to the Company of the proceeds in excess of
$2.90 per share from the sale of the Shares.
(4) To make the representations and warranties and enter into the
agreements on behalf of the undersigned and to execute such certificate or
certificates on behalf of the undersigned as may be required in order to confirm
the accuracy of the representations and warranties contained herein;
(5) To pay the undersigned's proportionate share of any necessary
and appropriate expenses in connection with the sale of the Shares (the source
of payment of such expenses being funds from the proceeds of the sale of the
Shares);
(6) To give any necessary approvals on behalf of the undersigned
to the Registration Statement and any amendments thereto or the Prospectus and,
if applicable, to advise the SEC on behalf of the undersigned that such person
is aware (i) that the SEC's staff has made summary, cursory or no review of the
Registration Statement, as applicable; and (ii) that such review or lack thereof
may not be relied upon in any degree to indicate that the Registration Statement
is true, complete or accurate;
(7) To retain legal counsel to represent the undersigned in
connection with any and all matters referred to herein which counsel shall be
Ruskin, Moscou, Xxxxx & Faltischek, P.C.;
(8) To make, execute, acknowledge and deliver all such other
contracts, stock powers, waivers, orders, receipts, notices, requests,
instructions, certificates, letters and other writings, including, without
limitation, requests for the acceleration of the effectiveness of the
Registration Statement and other communications to the SEC and other regulatory
authorities, and in general to do all things and to take all actions which you
may consider necessary or proper in connection with or to carry out the
aforesaid sale of Shares, collection of Funds and distribution of Funds as fully
as could the undersigned if personally present and acting;
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(9) To make, acknowledge, verify and file on behalf of the
undersigned applications, consents to service of process and such other
undertakings or reports as may be required by law with state commissioners or
officers administering state securities laws; and
(10) If necessary, to endorse (in blank or otherwise) on behalf
of the undersigned the certificate or certificates representing the Shares, or a
stock power and powers attached to such certificate or certificates.
The Attorneys are hereby empowered to determine in their sole discretion
the time or times at which, and purpose for and manner in which, any power
herein conferred upon them shall be exercised, and the conditions, provisions or
covenants of any instrument or document which may be executed by them pursuant
hereto.
All representations, warranties and agreements of the undersigned set
forth herein are true and correct and will survive the delivery of and payment
for the Shares.
Under the terms of the Power of Attorney, the authority conferred hereby
is an agency coupled with an interest and is irrevocable and not subject to
termination by the undersigned or by operation of law, whether by the death or
incapacity of the undersigned, the termination of any trust or estate, the death
or incapacity of one or more trustees, guardians, executors or administrators
under such trust or estate, the dissolution or liquidation of any corporation or
partnership or the occurrence of any other event. The obligations of the
undersigned will remain in full force and effect until the Termination Date and,
to the extent provided herein, after such date. Accordingly, the certificates
deposited with you hereunder and your authority hereunder are irrevocable and
are not subject to termination by the undersigned or by operation of law,
whether by the death or incapacity of the undersigned, the termination of any
trust or estate, the death or incapacity of one or more trustees, guardians,
executors or administrators under such trust or estate, the dissolution or
liquidation of any corporation or partnership or the occurrence of any other
event. If such death, incapacity, termination, dissolution, liquidation or other
event should occur before the delivery of the Shares to be sold by the
undersigned, certificates for such Shares shall be delivered by you on behalf of
the undersigned and action taken by you pursuant to this Agreement shall be as
valid as if such death or incapacity, termination, dissolution, liquidation or
other event had not occurred, regardless of whether or not you shall have
received notice of it.
Until payment of the purchase price for the Shares to be sold has been
made to you, the undersigned shall remain the owner of such Shares and shall
have the right to vote the Shares represented by the certificates deposited with
you hereunder and to receive all dividends and distributions thereon.
You shall be entitled to rely and shall be protected in acting or
refraining from acting upon any statement, request, notice or instructions
respecting this Agreement given to you on behalf of the undersigned.
It is understood that you assume no responsibility or liability to any
person other than to deal with the certificate(s) deposited with you hereunder
and the proceeds from the sale of all or a portion of the Shares represented
thereby in accordance with the provisions of this Agreement, and the undersigned
agrees to indemnify and hold you harmless with respect to anything done by you
in good faith in accordance with the foregoing instructions.
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III. Representations, Warranties and Agreements
(a) The undersigned hereby represents, warrants and agrees with the
Company and Ruskin, Moscou, Xxxxx & Faltischek, P.C., counsel to the Company,
and the Other Selling Stockholders that:
(i) I am the lawful owner of the Shares and has and will have, on
the date such Shares are sold, good title to such Shares, free of all
restrictions on transfer, liens, encumbrances, security interests and
claims whatsoever.
(ii) Upon delivery of and payment to you of at least $2.90 for
each Share, good title to such Shares will pass to the purchaser, free
of all restrictions on transfer, liens, encumbrances, security interests
and claims whatsoever.
(iii) I have, and on the date the Shares are sold by you, I will
have, full legal right, power and authority to sell, assign, transfer
and deliver such Shares, in the manner provided herein and therein, this
Agreement has been duly authorized, executed and delivered by me and is
my valid and binding agreement enforceable in accordance with its terms.
(iv) I have not taken, and will not take, directly or indirectly,
any action designed to, or which might reasonably be expected to, cause
or result in stabilization or manipulation of the price of any security
of the Company.
(v) Such parts of the Registration Statement, comprised of the
table and notes thereto under the caption "Principal and Selling
Stockholders" which specifically relate to me do not contain any untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in
light of circumstances under which they were made, not misleading.
(b) I have carefully reviewed the preliminary prospectus in the form
contained in the Registration Statement (the "Preliminary Prospectus") and will
carefully review the final Registration Statement and the related prospectus
upon receipt thereof from the Company and will promptly advise the Company in
writing if:
(i) The name and/or address of the undersigned (if required
to be disclosed) is not properly set forth in such documents;
(ii) In addition to the matters set forth in the Preliminary
Prospectus, (A) either the undersigned or any associate of the
undersigned has an interest adverse to the Company in any pending legal
proceeding, (B) either the undersigned or any associate of the
undersigned is a party to any contract, arrangement or understanding
with the Company, except a contract which has been disclosed and the
material terms of which have been fully and accurately described in the
Preliminary Prospectus, (C) the undersigned has any information
pertaining to underwriting compensation and arrangements or any dealings
between any "underwriter or related persons", "member" of the National
Association of Securities Dealers, Incorporated ("NASD") or a "person
associated with a member" and the Company or any controlling stockholder
thereof since the beginning of the Company's last fiscal year, other
than information relating to the proposed Underwriting Agreement, or (D)
the undersigned is a member of the NASD, a person associated with a
member of the NASD or an underwriter or related person with respect to
the proposed offering;
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(iii) The undersigned knows of or becomes aware of any reason due
to which the undersigned cannot represent and warrant that all
information relating to the undersigned in the Registration Statement or
the Prospectus or any Preliminary Prospectus or amendment thereto is
true and complete, except that these representations and warranties do
not apply to statements or omissions in the Preliminary Prospectus and
the Prospectus or any amendments or supplements thereto based upon
information furnished to the Company in writing by any of the
Underwriters specifically for use therein; or
(iv) In addition to arrangements described in the Preliminary
Prospectus, the undersigned knows of or discovers any arrangements made
or to be made by any person, or of any transaction already effected, (A)
to limit or restrict the sale of shares of the Company's Common Stock
during the period of the public distribution, (B) to stabilize the
market for the Common Stock of the Company, or (C) to withhold
commissions, or otherwise to hold the Underwriters or anyone else
responsible for the distribution of his participation.
The Attorneys may consider that there has not been any such development
unless advised to the contrary.
(c) Except as set forth below, neither the undersigned nor, to the
knowledge of the undersigned, any associate of the undersigned, is affiliated
with any firm directly or indirectly engaged in the securities business as a
broker or dealer or underwriter, as an employee acting in any capacity including
that of an officer or registered representative, as a director or partner, or as
an equity investor or debt investor, other than debt arising as a result of
trading activities. (One need not include or disclose investments in publicly
held corporations which in turn have investments in firms in the securities
business if one's investment in the publicly held corporation is of the same
class of security as is publicly held, and does not exceed 5% of such class.)
(d) The undersigned will furnish to the Representatives a properly
completed and executed Form W-9 prior to the First Closing Date.
It is understood that you will act as custodian and exercise your Power
of Attorney without compensation.
If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, (i) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby, and (ii) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, all portions of any
paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
The Attorneys, and any of them, shall be entitled to rely, and shall be
protected in acting or refraining from acting, upon any representation,
warranty, agreement, statement, request, notice or instruction respecting this
Power of Attorney given by the undersigned, not only as to the authorization,
validity and effectiveness thereof, but also as to the truth and acceptability
of any information therein contained.
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The foregoing representations, warranties and agreements are made for
the benefit of, and may be relied upon by, Ruskin, Moscou, Xxxxx & Faltischek,
P.C. for purposes of the opinions.
It is understood that the Attorneys assume no responsibility or
liability to any person other than to deal with the certificate(s) representing
the undersigned's Shares deposited with the Custodian pursuant to the Custody
Agreement and the proceeds from the sale of the Shares in accordance with the
provisions hereof. The Attorneys (in such capacity) make no representations with
respect to, and shall have no responsibility for, the Registration Statement or
the Prospectus nor, except as herein expressly provided, for any aspect of the
offering of Common Stock, and the Attorneys shall not be liable for any error of
judgment or for any act done or omitted or for any mistake of fact or law except
for the Attorneys' own gross negligence, bad faith or willful misconduct. The
undersigned agrees to indemnify the Attorneys for and to hold the Attorneys,
jointly and severally, free from and harmless against any and all loss, claim,
damage, liability or expense incurred by or on behalf of the Attorneys, or any
of them, arising out of or in connection with acting as Attorneys under this
Power of Attorney, as well as the cost and expense of defending against any
claim of liability hereunder, and not due to the Attorneys' own gross
negligence, bad faith or willful misconduct. The undersigned agrees that the
Attorneys may consult with counsel of their choice (which may but need not be
counsel for the Company) and the Attorneys shall have full and complete
authorization and protection for any action taken or suffered by the Attorneys,
or any of them hereunder, in good faith and in accordance with the opinion of
such counsel.
This Agreement shall be governed by the laws of the State of New York.
Dated: ____________, 1996
Very truly yours,
Name:
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Address:
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Instruction: Indicate how you wish to receive payment for the Shares sold:
MANNER OF PAYMENT
The undersigned requests that payment for the Shares to be sold by the
undersigned pursuant to the Underwriting Agreement be made in the following
manner (CHECK ONE):
BANK CHECK in next day funds made payable to the
order of:
-------------------------------
to be sent to the following
address:
-------------------------------
-------------------------------
Telephone #:(___) _____________
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ANNEX B
Instruction: Date, execute and have your signature guaranteed.
* DO NOT fill in the number of Shares.
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________________, _______________________ (___________)
shares of Common Stock, $.01 par value, of U.S. Golf & Entertainment Inc., a
Delaware corporation, and does hereby irrevocably constitute and appoint Xxxxxx
X. Xxxx and Xxxxxx X. Xxxxxxxxx, acting jointly, his Attorneys-in-
Fact to transfer said shares on the books of said corporation.
Dated: ____________, 1996
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Name
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