EXHIBIT 1.1
ESCROW AGREEMENT
Escrow Agreement made as of the _____ day of February, 2002 by and
among Hollow Egg One Inc., a Delaware corporation (the "Company") and Valley
National Bank, a national association (the "Escrow Agent").
Now, Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for
themselves, their successors and assigns, hereby agree as follows:
1. Definitions.
Agreement This Escrow Agreement
Amended Registration
Statement The post-effective amendment to the Initial
Registration Statement, prepared and filed
with the Commission with respect to the
implementation of the Plan Prerequisites
Business Day Any day in which the Trust Department of the
Escrow Agent is open to the public
Certificates Stock certificates evidencing the Registered
Shares purchased
Commission United States Securities and Exchange
Commission
Company Representative An individual(s) with full authority to deal
with the Escrow Agent in behalf of the
Company and so designated herein
Company Hollow Egg One Inc., a Delaware corporation
Escrow Accounts The Funds Escrow Account and Shares Escrow
Account, collectively
Escrow Agent Valley National Bank, a national association
Exchange Act United States Securities Exchange Act of
1934
Exhibits Addenda hereto which, because of their size,
format or nature, would impair the
readability of this Agreement if contained
therein, which Exhibits consist of the
following: A-Rules 419, 10b-9,and 15g-8;
B-Subscription Agreement (subscription
rights); C- Subscription Agreement
(general); D-Escrow Agent Fee Schedule;
E-Company Representative Specimen Signature
Schedule; F-Letter Representations and/or
Instructions by Company to Escrow Agent
Funds Escrow Account The Offering Proceeds as held in escrow by
the Escrow Agent
Indemnified Party(ies) The Escrow Agent and persons named herein
who shall be indemnified by the Company
Initial Effective Date The date on which the Initial Registration
Statement is declared effective by the
Commission
Initial Registration
Statement The Securities Act registration statement on
Form SB-2 to be filed with the Commission
with respect to the Registered Shares
Investors Purchasers in the Offering of the Registered
Shares
IRS Form Internal Revenue Service Form W-9 or W-8. as
applicable
Written Direction Written directions to the Escrow Agent given
by the Company with respect to action under
this Agreement
Offering Proceeds
Instruments Checks, drafts or money orders utilized as
subscription payments
Offering Proceeds Subscription funds paid by the Investors for
the Registered Shares
Offering Period The time period, as extended, during which
the Offering will occur
Offering The proposed public offering of the
Registered Shares
Other Stock Company stock, other than Shares, for which
Certificates are issued
Parent Tecumseh Holdings Corporation
Plan The Company's plan to engage in a merger or
acquisition with an unidentified company or
companies
Plan Period The period following the Offering Period
during which the Company intends to
implement the Plan
Plan Prerequisites The requirements of Rule 419 for the
effectuation of the Plan
Registered Shares 1 million Shares to be offered for sale to
the public
Rule 419 Rule 419 of Regulation C of the Securities
Act
Rule 10b-9 Rule 10b-9 of the Exchange Act
Rule 15g-8 Rule 15g-8 of the Exchange Act
Rules Rules 419, Rule 10b-9, and Rule 15g-8,
collectively
Securities Act United States Securities Act of 1933
Shares Escrow Account The Certificates as held in escrow by the
Escrow Agent
Shares 10 million shares of common stock, $.0001
par value, authorized to be issued by the
Company
Subscription Agreement The agreement for the Investor's purchase of
the Registered Shares
Subscription Documents The Subscription Agreement and the IRS Form,
collectively
Termination Dates The date on which the Offering or the Plan
is terminated, irrespective of the reason
therefor
Unregistered Shares 9,000,000 Shares heretofore issued to the
Parent
2. Recitals.
2.1 The Company is a Delaware corporation and a "blank check company ",
as that term is defined in Rule 419 ("Rule 419") of the Securities Act of 1933,
as amended (the "Securities Act"), to which Rule 419 the Offering described
below is subject. A blank check company is, among other things, a development
stage company which has no specific business plan or purpose or has indicated
that its business plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entity or person. The business plan
and purpose of the Company (the "Plan") is to engage in a merger or acquisition
with an unidentified company or companies, or other entity or person by way of
identifying such a company or companies, negotiating with the same, and
concluding such a transaction during the period following completion of the
public offering of the Company's securities described below (the "Plan Period").
2.2 The Company is authorized to issue one class of security, viz. 10
million shares of common stock, $0.0001 par value per share (the "Shares"), with
respect to which Shares neither any warrants, convertible securities or other
derivative securities nor any stock dividends, stock splits or reverse stock
splits are authorized or intended to be authorized during the Plan Period. The
Company intends to file with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Initial Registration Statement")
under the Securities Act for the purpose of making a public offering (the
"Offering"), by way of the officers of the Company, of 1,000,000 Shares (the
"Registered Shares") to investors therein (the "Investors") at a per Share price
of $0.25, the remaining 9,000,000 Shares (the "Unregistered Shares") being
currently owned and held by Tecumseh Holdings Corporation, the parent and
promoter of the Company (the "Parent"). The Offering is required to be made in
accordance with, among other laws, statutes, rules and regulations, Rule 419 and
Rule 10b-9 ("Rule 10b- 9"), and Rule 15g-8 ("Rule "15g-8") of the Securities
Exchange Act of 1934 (the "Exchange Act")
2.3 The Company will conduct the Offering on an "all-or-none" basis
during a period of time (the "Offering Period") described below. All lawful
out-of-pocket expenses of any kind, authorized by the Company and arising from
or in connection with either the Offering or the Plan, incurred by any person,
shall be paid by the Company or, if it is unable to do so, by the Parent,
provided the same shall not constitute compensation for the sale of the
Registered Shares.
2.4 In furtherance of the completion of the Offering and the
realization of the Plan, the Company has engaged the services of the Escrow
Agent, which is an "insured depository institution," as that term is defined in
Section 3(c)(2) of the Federal Deposit Insurance Act. The Escrow Agent shall act
as such in accordance with the provisions of Rule 10b-9, Rule 15g-8 and Rule 419
(collectively the "Rules"), the relevant provisions of which are as follows:
a. Subparagraph (a) of Rule 10b-9, requires that, when a
securities offering will be conducted on an "all-or-none" basis, it would be
fraudulent to make any representation:
"(1) To the effect that the security is being offered or sold
on an "all-or-none" basis, unless the security is part of any offering or
distribution being made on the condition that all or a specified amount of the
consideration paid for such security will be promptly refunded to the purchaser
unless
"A. all of the securities being offered are sold at
a specified price within a specified time, and
"B. the total amount due to the seller is received
by him by a specified date;"
b. Subparagraphs (b)(1)(i) and (ii), (b)(2)(i), and (b)(3)(i)
of Rule 419 require, among several alternatives, that
"(b)(1)(i) Except as otherwise provided in this
section or prohibited by other applicable law, all securities issued in
connection with an offering by a blank check company and the gross proceeds from
the offering shall be deposited promptly into: (A) An escrow account maintained
by an 'insured depository institution', as that term is defined in Section
3(c)(2) of the Federal Deposit Insurance Act; * * * *"
"(b)(1)(ii) If funds and securities are deposited
into an escrow account maintained by an insured depository institution, the
deposit account records of the insured depository institution must provide that
funds in the escrow account are held for the benefit of the purchasers named and
identified in accordance with Rule 330.1 of the regulations of the Federal
Deposit Insurance Corporation, and the records of the escrow agent, maintained
in good faith and in the regular course of business, must show the name and
interest of each party to the account. If funds and securities are deposited in
a separate bank account established by a broker or dealer acting as a trustee,
the books and records of the broker-dealer must indicate the name, address, and
interest of each person for whom the account is held."
"(b)(2)(i) All offering proceeds, after deduction of
cash paid for underwriting commissions, underwriting expenses and dealer
allowances, and amounts permitted to be released to the registrant pursuant to
paragraph (b)(2)(vi) of this section, shall be deposited promptly into the
escrow or trust account; provided, however, that no deduction may be made for
underwriting commissions, underwriting expenses or dealer allowances payable to
an affiliate of the registrant."
"(b)(3)(i) All securities issued in connection with
the offering, whether or not for cash consideration, and any other securities
issued with respect to such securities, including securities issued with respect
to stock splits, stock dividends, or similar rights, shall be deposited directly
into the escrow or trust account promptly upon issuance. The identity of the
purchaser of the securities shall be included on the stock certificates or other
documents evidencing such securities. See also Rule 15g-8 regarding restrictions
on sales of, or offers to sell, securities deposited in the escrow or trust
account."
c. Rule 15g-8 provides that
". . . . .it shall be unlawful for any person to sell
or offer to sell any security that is deposited and held in an escrow or trust
account pursuant to Rule 419 under the Securities Act of 1933, or any interest
in or related to such security, other than pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended, or
Title 1 of the Employee Retirement Income Security Act, or the rules
thereunder."
2.5 Securities Act Notes to Rule 419(e) provide that "With respect to a
blank check offering subject to both Rule 419 and Exchange Act Rule 10b-9, the
requirements of Rule 10b-9 are applicable only until the conditions of the
offering governed by that rule are met (e.g. reaching the minimum in a
"part-or-none" offering). When those conditions are satisfied, Rule 419
continues to govern the use of offering proceeds."
2.6 Based upon the foregoing, the Escrow Agent has agreed to create and
maintain two escrow accounts (the "Escrow Accounts") with respect to the
Offering and the Plan, as follows: (a) a funds escrow account (the "Funds Escrow
Account") in which there shall be held during the Offering Period the gross
funds proceeds of the Offering, subject to and in accordance with the provisions
of Rule 10b-9 and, upon completion of the Offering, during the
Plan Period, the gross funds proceeds of the Offering (less deductions allowed
by Rule 419(b)(2)(vi)), subject to and in accordance with the provisions of Rule
419, (the "Offering Proceeds" which shall be deemed to include any interest or
dividends thereon); and, (b) upon the completion of the Offering, a custodial
escrow account (the "Shares Escrow Account") in which there shall be held during
the Plan Period the certificates evidencing the Registered Shares sold in the
Offering, the Unregistered Shares owned by the Parent, and any incremental
securities deposited into the Shares Escrow Account (collectively the
"Certificates"), fully completed, executed and registered in the name(s)
designated by the Investors.
2.7 The Escrow Agent shall establish the Escrow Accounts for the sole
benefit of the persons having the beneficial interests in the Escrow Accounts.
The records of the Escrow Accounts shall provide that the funds or securities in
the Escrow Accounts are held for the benefit of the purchasers named and
identified in accordance with Rule 330.1 of the regulations of the Federal
Deposit Insurance Corporation, and the records of the Escrow Agent, maintained
in good faith and in the regular course of business, shall show the name and
interest of each party to the account. The Escrow Accounts shall be maintained
in the following name, viz. "Valley National Bank, Escrow Agent of Hollow Egg
One Inc." The Escrow Agent will hold Offering Proceeds and the Certificates in
the Escrow Accounts free from any lien, claim or offset.
2.8 A complete copy of Rule 419, Rule 10b-9, and Rule 15g-8 is annexed
hereto as Exhibit A and made a part hereof.
3. The Offering (Rule 10b-9).
3.1 The Company, shall conduct the Offering of 1,000,000 Registered
Shares on an "all-or-none" basis in accordance with the provisions of the
Initial Registration Statement. The Company shall make the Offering during a
period of 60 days commencing with the effective date of the Initial Registration
Statement (the "Initial Effective Date") which period may be extended for two
consecutive 45-day periods at the sole discretion of the Company (such offering
period as it may be extended the "Offering Period"). The prospectus and the
subscription documents (collectively the "Offering Documents") by which the
Offering shall be made shall provide that all subscription documents and all
instruments representing Offering Proceeds shall be sent by the Investor
directly to the Company. The subscription documents shall include an IRS Form
W-9 or W-8, as applicable (the "IRS Form"), and a subscription agreement (the
"Subscription Agreement") which shall include the name, mailing address,
taxpayer identification number, telephone and fax numbers, number of Registered
Shares purchased for, and amount of subscription payment of such Investor, which
Subscription Agreement shall further represent and confirm that the Investor has
received a copy of this Escrow Agreement, each of which IRS Forms and
Subscription Agreements (collectively the "Subscription Documents") shall be
completed and executed by each Investor.
3.2 Offering Proceeds shall be in the form of checks, drafts, or money
orders (the "Offering Proceeds Instruments") payable to the order of "Valley
National Bank, Escrow Agent of Hollow Egg One Inc." and shall have been received
by the Company accompanied by the completed and executed Subscription Documents.
The Company forthwith upon receipt thereof shall photocopy the said Proceeds
Instruments and Subscription Documents, record the pertinent information
contained therein, and promptly deliver the Proceeds Instruments and
Subscription Documents to the Escrow Agent. Any check from an Investor which is
returned unpaid to the Escrow Agent shall be returned to Company. The deposited
Offering Proceeds may also be in the form of a funds wire transfer to "Federal
Reserve Bank of New York for the account of Valley National Bank N.A., ABA No.
000000000, Attention Trust Service No. 73187, FFC to Hollow Egg One Inc. Funds
Escrow Account No. [to be determined]. The Escrow Agent promptly shall notify
the Company of all such wire transfers including both the amount and the
transferor thereof and any additional advice included therewith. The Company
shall promptly deliver to the Escrow Agent any Subscription Documents received
by the Company in
connection with such wire transfer. The Escrow Agent will hold Offering Proceeds
in the Funds Escrow Account free from any lien, claim or offset.
3.3 The Escrow Agent promptly shall deposit all Offering Proceeds
received by it into the Funds Escrow Account. The Escrow Account records of the
Escrow Agent shall provide that funds in the escrow account are held for the
benefit of the purchasers named and identified in accordance with Rule 330.1 of
the regulations of the Federal Deposit Insurance Corporation, and the records of
the Escrow Agent, maintained in good faith and in the regular course of
business, shall show the name and interest of each party to the account.
Interest or dividends earned by the Funds Escrow Account will be accrued to the
account of each Investor but no such accrual shall be entered in the Escrow
Agent's records unless and until the Escrow Agent shall have received an I.R.S.
Form W-9 or W-8, as applicable, completed and executed by the Investor.
3.4 The Escrow Agent shall provide written notification to the Company,
on a daily basis, of the Offering Proceeds and of the data relevant thereto,
which have been deposited in the Funds Escrow Account and of the amounts thereof
which have cleared the banking system and have been collected by the Escrow
Agent.
3.5 Deposited Offering Proceeds and interest or dividends thereon, if
any, shall be held for the sole benefit of the Investors in the Registered
Shares. Deposited Offering Proceeds shall be invested in securities of any
open-end investment company registered under the Investment Company Act of 1940
that holds itself out as a money market fund meeting the conditions of
paragraphs (c) (2), (c) (3), and (c) (4) of Rule 2a-7 under the Investment
Company Act, such money market fund to be selected by the Escrow Agent.
3.6 The Company reserves the right to terminate the Offering at any
time prior to its completion at its sole discretion, in which event the Company
promptly shall notify the Escrow Agent and the Escrow Agent shall return the
Offering Proceeds to the persons entitled thereto as hereinafter provided. The
Company further reserves the right to reject or cancel any subscription in whole
or in part at its respective sole discretion. In the event of such whole or
partial rejection of any subscription as aforesaid, the Company shall promptly
notify the Escrow Agent of such rejection. In the event of termination of the
Offering, the Escrow Agent shall, If Escrow Agent has not deposited the check
for such Subscriber, the Escrow Agent shall, within ten (10) days, return such
check and the other Escrow Funds respecting such Subscriber pursuant to the
information delivered for such Subscriber to the Company. If the check for such
Subscriber has been deposited, the Escrow Agent shall remit a reimbursement
check respecting such Subscriber as per the information provided within ten (10)
days after Escrow Agent has confirmed that such check has cleared. All
subscriptions are irrevocable, and no Investor will have any right to cancel or
rescind the subscription, except as required under the law of any jurisdiction
in which the Registered Shares are sold.
3.7 In the event the Offering shall be terminated, either by reason of
the failure to complete the sale of the Registered Shares within the Offering
Period, the discretionary termination by the Company of the Offering prior to
the expiration of the Offering Period, or otherwise, the proceeds of the
Offering (the "Offering Proceeds"), together with any accumulated interest
thereon, shall promptly be returned to the persons entitled thereto.
3.8 In the event the Offering shall be completed within the Offering
Period, Rule 419 shall continue to govern the disposition of the Offering
Proceeds and the issuance and disposition of the Certificates as hereinafter
provided.
3.9 A complete copy of the Placement Agency Agreement is annexed hereto
as Exhibit B and made a part hereof. A complete copy of the Subscription
Agreement is annexed hereto as Exhibit C and made a part hereof.
4. Disposition of Offering Proceeds Following Completion of the Offering (Rule
419(b)(2)).
4.1 Paragraph (b)(2) of Rule 419, entitled Deposit and Investment of
Proceeds, provides as follows:
"(i) All offering proceeds, after deduction of cash paid for
underwriting commissions, underwriting expenses and dealer allowances, and
amounts permitted to be released to the registrant pursuant to paragraph
(b)(2)(vi) of this section, shall be deposited promptly into the escrow or trust
account; provided, however, that no deduction may be made for underwriting
commissions, underwriting expenses or dealer allowances payable to an affiliate
of the registrant.
"(ii) Deposited proceeds shall be in the form of checks,
drafts, or money orders payable to the order of the escrow agent or trustee.
"(iii) Deposited proceeds and interest or dividends thereon,
if any, shall be held for the sole benefit of the purchasers of the securities.
"(iv) Deposited proceeds shall be invested in one of the
following:
"(A) An obligation that constitutes a "deposit," as
that term is defined in Section (3) (1) of the Federal Deposit Insurance Act;
"(B) Securities of any open-end investment company
registered under the Investment Company Act of 1940 that holds itself out as a
money market fund meeting the conditions of paragraphs (c) (2), (c) (3), and (c)
(4) of Rule 2a-7 under the Investment Company Act; or
"(C) Securities that are direct obligations of, or
obligations guaranteed as to principal or interest by, the United States.
"Note to Rule 419(6)(2)(iv). Issuers are cautioned that
investments in government securities are inappropriate unless such securities
can be readily sold or otherwise disposed of for cash at the time required
without any dissipation of offering proceeds invested.
"(v) Interest or dividends earned on the funds, if any, shall
be held in the escrow or trust account until the funds are released in
accordance with the provisions of this section. If funds held in the escrow or
trust account are released to a purchaser of the securities, the purchaser shall
receive interest or dividends earned, if any, on such funds up to the date of
release. If funds held in the escrow or trust account are released to the
registrant, interest or dividends earned on such funds up to the date of release
may be released to the registrant.
"(vi) The registrant may receive up to 10 percent of the
proceeds remaining after payment of underwriting commissions, underwriting
expenses and dealer allowances permitted by paragraph (b)(2)(i) of this section,
exclusive of interest or dividends, as those proceeds are deposited into the
escrow or trust account."
4.2 Promptly upon the completion of the Offering, the Escrow Agent,
pursuant to Rule 419(b)(2)(vi), shall pay to the Company the sum of $25,000,
constituting 10% of the gross Offering Proceeds of $250,000 held in the Funds
Escrow Account, by way of reimbursement to the Company of all out-of-pocket
expenses of any kind incurred or to be incurred in connection with the Offering,
provided the same shall not constitute compensation for the sale of the
Registered Shares.
4.3 The balance of the funds in the Funds Escrow Account remaining
after payment to the Company as aforesaid shall continue to be invested by the
Escrow Agent in a money
market fund, as described above, selected by the Escrow Agent. Interest or
dividends earned by the Funds Escrow Account will be accrued to the account of
each Investor but no such accrual shall be entered in the Escrow Agent's records
unless and until the Escrow Agent shall have received an I.R.S. Form W-9 or W-8,
as applicable, completed and executed by the Investor. Deposited Offering
Proceeds and interest or dividends thereon, if any, shall be held for the sole
benefit of the Investors in the Registered Shares.
4.4 Interest or dividends earned by funds in the Funds Escrow Account,
if any, shall be deemed to be Offering Proceeds and shall be held in the Funds
Escrow Account until the Offering Proceeds are released in accordance with the
provisions of Rule 419. If Offering Proceeds held in the Funds Escrow Account
are released to an Investor, the Investor shall receive interest or dividends
earned, if any, on such Offering Proceeds up to the date of release, subject to
compliance with the conditions hereinbefore set forth. If Offering Proceeds held
in the Funds Escrow Account are released to the Company, interest or dividends
earned on such Offering Proceeds up to the date of release may be released to
the Company.
4.5 Offering Proceeds including all interest and dividends thereon, if
any, shall be held for the sole benefit of the Investors in the Registered
Shares.
5. Disposition of Securities Following Completion of the Offering (Rule
419(b)(3)).
5.1 Paragraph (b)(3) of Rule 419, entitled Deposit of Securities,
provides as follows:
"(i) All securities issued in connection with the offering,
whether or not for cash consideration, and any other securities issued with
respect to such securities, including securities issued with respect to stock
splits, stock dividends, or similar rights, shall be deposited directly into the
escrow or trust account promptly upon issuance. The identity of the purchaser of
the securities shall be included on the stock certificates or other documents
evidencing such securities. See also Rule 15g-8 regarding restrictions on sales
of, or offers to sell, securities deposited in the escrow or trust account.
"(ii) Securities held in the escrow or trust account are to
remain as issued and deposited and shall be held for the sole benefit of the
purchasers, who shall have voting rights, if any, with respect to securities
held in their names, as provided by applicable state law. No transfer or other
disposition of securities held in the escrow or trust account or any interest
related to such securities shall be permitted other than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986 as amended, or Title I of the
Employee Retirement Income Security Act, or the rules thereunder.
"(iii) Warrants, convertible securities or other derivative
securities relating to securities held in the escrow or trust account may be
exercised or converted in accordance with their terms; provided, however, that
securities received upon exercise or conversion, together with any cash or other
consideration paid in connection with the exercise or conversion, are promptly
deposited into the escrow or trust account.
5.2 Promptly upon the completion of the Offering, the Company shall
issue certificates evidencing the Registered Shares purchased by the Investors
and evidencing any other stock ("Other Stock") of the Company issued in
connection with the Offering (collectively the "Certificates"). The identity of
the purchaser or recipient of the stock represented by each such Certificate
shall be included on the Certificate. The Company does not intend to issue any
Other Stock. The issuance of the Certificates shall be based upon the books and
records of the Company indicating the name, address, and interest of each person
entitled to the issuance of the Certificates.
5.3 Prior to the completion of the Offering the Escrow Agent, shall
have established a custodial account in which the Certificates may lodged in
trust (the "Shares Escrow Account"). All Certificates evidencing all Registered
Shares issued in connection with the Offering, whether or not for cash
consideration, evidencing the Unregistered Shares of the Parent, and evidencing
any other securities issued with respect to such securities, including
securities issued with respect to stock splits, stock dividends, or similar
rights, shall promptly be delivered to the Escrow Agent as Escrow Agent. The
Escrow Agent shall cause the Certificates to be deposited directly into the
Shares Escrow Account promptly upon issuance and receipt. The books and records
of the Escrow Agent shall indicate the name, address, interest, and Certificate
number of each person in whose name the deposited Certificates have been issued.
5.4 Securities held in the Shares Escrow Account are to remain as
issued and deposited and shall be held for the sole benefit of the Investors,
who shall have voting rights, if any, with respect to securities held in their
names, as provided by applicable state law. By reason of the operation of Rule
15g-8, no transfer or other disposition of securities held in the Shares Escrow
Account or any interest related to such securities shall be permitted other than
by will or the laws of descent and distribution, or pursuant a qualified
domestic relations order as defined by the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security Act, or the rules
thereunder. The Escrow Agent shall be entitled, but not required, to rely wholly
upon the advice of the Company with respect to any such request for transfer,
and shall be fully indemnified as hereinafter provided.
5.5 Warrants, convertible securities or other derivative securities
relating to securities held in the Shares Escrow Account may be exercised or
converted in accordance with their terms; provided, however, that securities
received upon exercise or conversion, together with any funds or other
consideration paid in connection with the exercise or conversion, are promptly
deposited into the Funds Escrow Account or the Shares Escrow Account, as
applicable.
6. Conditions For Release of Deposited Securities and Funds (Rule 419(e)(3)).
6.1 Paragraph (e)(3) of Rule 419, entitled Conditions for Release of
Deposited Securities and Funds, provides as follows:
"Funds held in the escrow or trust account may be released to
the registrant and securities may be delivered to the purchaser or other
registered holder identified on the deposited securities only at the same time
as or after:
"(i) The escrow agent or trustee has received a signed
representation from the registrant, together with other evidence acceptable to
the escrow agent or trustee, that the requirements of paragraphs (e)(1) and
(e)(2) of this section have been met; and
"(ii) Consummation of an acquisition(s) meeting the
requirements of paragraph (e)(2)(iii) of this section."
6.2 The Offering Proceeds held in the Escrow Account, including any
interest and/or dividends thereon up to the date of release, may be released to
the Company and the Certificates for the Registered Shares and other deposited
securities, if any, up to the date of delivery, may be delivered to the Investor
or other registered holder identified on the Registered Shares and other
deposited securities, if any, by certified mail, return receipt requested, only
at the same time as or after the Escrow Agent has received a signed
representation from the Company, together with other evidence acceptable to the
Escrow Agent, that:
a. The requirements of Rule 419 (e)(1) and Rule 419(e)(2) have
been met. For informational purposes, reference is made to Exhibit A annexed
hereto and made a part
hereof, in which Rules 419 (e)(1) entitled Post-Effective Amendment for
Acquisition Agreement and 419(e)(2) entitled Terms of the Offering are set forth
at length.
b. An acquisition(s) meeting the requirements of Rule
419(e)(2)(iii) has been fully consummated.
6.3 The Offering Proceeds held in the Escrow Account, including any
interest and/or dividends thereon up to the date of release, shall be returned
by first class mail or equally prompt means to the Investors within five
business days following the dates set forth below (the "Termination Dates") and
the Registered Shares and other deposited securities, if any, up to the date of
delivery, held in the Shares Escrow Account shall contemporaneously be
cancelled, except for the Unregistered Shares which shall be returned to the
Parent, and the Registration Statement shall be formally withdrawn.
a. The date on which, following full compliance by the Company
with the requirements of Rule 419(e)(1) and (e)(2), the consummation of an
acquisition shall be precluded by reason of the failure of Company to meet the
requirements of Rule 419(e)(2)(iii), unless the Company shall determine to seek
another merger or acquisition, in which event the Company promptly shall advise
all Investors in writing.
b. The date, 18 months from the effective date of the Initial
Registration Statement, at which time a consummated acquisition(s) meeting the
requirements of Rule 419 shall not have occurred.
6.4 The conditions and requirements of Rule 419(e) shall hereafter be
referred to as the "Plan Prerequisites").
7. Disbursement into Court.
7.1 If, at any time, there shall exist any dispute between Company and
an Investor with respect to the holding or disposition of any portion of the
Escrow Accounts, or any other obligations of the Escrow Agent hereunder, or if
at any time the Escrow Agent is unable to determine, to Escrow Agent's sole
satisfaction, the proper disposition of any portion of the Escrow Accounts or
Escrow Agent's proper actions with respect to its obligations hereunder, or if
the Escrow Agent resigns or is removed and no successor is appointed by the
written direction of the Company (the "Written Direction") within twenty (20)
banking business days ("Business Days") after such resignation or within ten
(10) Business Days after such removal, then the Escrow Agent may, in its sole
discretion:
a. Suspension. Escrow Agent may suspend the performance of any
of its obligations (including, without limitation, any disbursement obligations)
under this Agreement until such dispute or uncertainty shall be resolved to the
sole satisfaction of Escrow Agent; provided, however, that Escrow Agent shall
continue to hold the Escrow Accounts in accordance herewith, and/or
b. Petition. The Escrow Agent may petition (by means of an
interpleader action or any other appropriate method) any court of competent
jurisdiction in the State of New Jersey, for instructions with respect to such
dispute or uncertainty, and, to the extent required by law, pay into such court
all Escrow Accounts held by it for holding by such court and disposition in
accordance with the procedures set forth in the Subscription Papers, or as
otherwise ordered by such court, after deduction and payment to Escrow Agent of
all fees and expenses (including court costs, attorney's fees, and
paraprofessional fees) payable to, incurred by, or expected to be incurred by
Escrow Agent in connection with the performance of its duties and the exercise
of its rights hereunder.
7.2 Escrow Agent shall have no liability to the Company or any other
person with respect to any such suspension of performance or disbursement into
court, specifically including any liability or claimed liability that may arise,
or be alleged to have arisen, out of or as a result of a delay in the
disbursement of the Escrow Accounts or any delay in or with respect to any other
action required or requested of the Escrow Agent.
8. Resignation and Removal of the Escrow Agent.
8.1 General. The Escrow Agent may resign from the performance of its
duties at any time by giving twenty (20) Business Days' prior written notice to
the Company, or may be removed, with or without cause, by a written notice from
an authorized representative of the Company, designated herein or designated in
writing herein by the designee herein (the "Company Representative") to the
Escrow Agent at any time by the giving of ten (10) Business Days' prior written
notice to the Escrow Agent. Such resignation or removal shall take effect upon
the appointment of a successor Escrow Agent as provided herein below and the
successor Escrow Agent's acceptance of the appointment. Upon any such notice of
resignation or removal, a Company Representative shall appoint a successor
Escrow Agent hereunder by written direction.
8.2 Discharge of Valley National Bank. Valley National Bank shall be
discharged from its duties and obligations under this Agreement upon the
appointment of any successor Escrow Agent; provided, however, the provisions of
this Agreement benefitting Escrow Agent shall continue to inure to the benefit
of Valley National Bank as to any actions taken or omitted to be taken by it
while it was Escrow Agent under this Agreement.
8.3 Transmittal of Records. Upon its resignation or replacement, the
Escrow Agent shall pay or deliver the balances and contents of all of the Escrow
Accounts, together with copies of all documents and records in the possession of
the Escrow Agent relating to the Escrow Accounts, to the successor Escrow Agent,
but only after receipt of payment to the Escrow Agent from Tecumseh Holdings
Corporation of all reasonable fees and expenses (including court costs,
attorneys' fees, and paraprofessional fees) payable to, incurred by, or expected
to be incurred by the Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder. No invasion of the contents of
an Escrow Account shall be made by the Escrow Agent or by a successor Escrow
Agent, such invasion constituting a violation of Rule 419.
9. Duties of the Escrow Agent to be Wholly Administrative.
The duties of the Escrow Agent hereunder shall be entirely
administrative in nature and not discretionary. The Escrow Agent shall be
obligated to act only in accordance with written instructions received by it as
provided in this Agreement, and is hereby authorized to comply with any orders,
judgments, or decrees of any court, with or without jurisdiction, and shall not
be liable as a result of its compliance with the same. The Escrow Agent shall
have no duty or obligation to assure itself that the Offering is in compliance
with any statute or regulation prior to the disbursement to the Company or to
any Investor of the contents of any Escrow Accounts.
10. Indemnity.
From and at all times after the date of this Agreement, the Company
shall, to the fullest extent permitted by law and to the extent provided herein,
indemnify and hold harmless the Escrow Agent and each director, officer,
employee, attorney, agent and affiliate of Escrow Agent (individually the
"Indemnified Party" and collectively the "Indemnified Parties") against any and
all actions, claims (whether or not valid), losses, damages, liabilities, costs
and expenses of any kind or nature whatsoever, including without limitation
reasonable attorneys' fees, paraprofessional fees and costs and expenses related
to such actions, claims, losses, damages, and liabilities. incurred by or
asserted against any of the Indemnified Parties from and
after the date hereof, whether direct, indirect or consequential, as a result of
or arising from or in any way relating to any claim, demand, suit, action or
proceeding (including any inquiry or investigation) by any person, whether
threatened or initiated, asserting a claim for any legal or equitable remedy
against any person under any statute or regulation, including, but not limited
to, any federal or state securities laws, or under any common law or equitable
cause or otherwise, arising from or in connection with the negotiation,
preparation, execution, performance or failure of performance of this Agreement
or any transactions contemplated herein (including the purchase of the Units)
whether or not any such one or more of the Indemnified Parties are parties to
any such action, proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the right
to be indemnified hereunder for any liability finally determined by a court of
competent jurisdiction, subject to no further appeal, to have resulted solely
from the gross negligence or willful misconduct of such Indemnified Party.
Without limiting the foregoing, the Company shall specifically indemnify the
Escrow Agent in connection with any claim made by an Investor in connection with
the release of the contents of the Escrow Accounts to the Company pursuant to
the terms hereof. All such fees and expenses shall be payable by the Company
pursuant to the foregoing sentence and shall be paid from time to time as
incurred, both in advance of and after the final disposition of such action or
claim. In addition, the Company hereby agrees to indemnify the Escrow Agent and
hold it harmless from any liability of Escrow Agent which shall arise as a
result of the breach or violation by the Company of any of the provisions of
this Agreement, the Subscription Documents, the Initial Registration Statement,
the Amended Registration Statement or any other rules, regulations, or laws
affecting the Offering or the Registered Shares. The Company hereby agree that
it shall, at all times, comply with all of the provisions of the applicable
federal and state securities laws, as well as all laws, statutes, rules and
regulations of any governmental agency or self-regulatory organization in such
cases made and provided. The obligations of the Company under this paragraph
shall survive any termination of this Agreement and the resignation or removal
of the Escrow Agent.
11. Limitation of Liability of Escrow Agent.
11.1 The obligations of the Escrow Agent shall be determined solely by
the express provisions of this Agreement. The Escrow Agent may act in reliance
upon any writing, instrument, and/or signature, whether original or facsimile,
which the Escrow Agent, in good faith, believes to be genuine, may assume the
validity, truth, and accuracy of any statement or assertion contained in such a
writing or instrument, and that any person purporting to give any writing,
notice, advice, or instruction in connection with the provisions hereof has been
duly authorized to do so. The Escrow Agent shall not be liable in any manner for
the sufficiency or correctness as to form, manner or validity of any instrument
deposited or delivered pursuant to this Agreement, nor as to the identity,
authority, or right of any person executing the same. Without limiting the
foregoing, the Escrow Agent shall have no responsibility to determine whether
the holding, disbursement, payment or delivery of the contents of an Escrow
Account is appropriate or required under the applicable documents.
11.2 The Escrow Agent has not examined and is in no way responsible for
the contents of the Subscription Agreement or any of the other Subscription
Documents. By accepting the position of Escrow Agent, the Escrow Agent and the
Company agree that the Escrow Agent's duties and obligations are set forth
solely in this Agreement and Escrow Agent has not evaluated the merits of the
Offering. The Company shall prevent any person or entity from using the Escrow
Agent's name as an endorser of the Offering. The Escrow Agent has no
responsibility for the Subscription Documents, the registration of the Shares to
be offered in the Offering, or the propriety, content or form of any of the
documents relevant to the Offering including the Initial Registration Statement,
the post-effective amendment to the Initial Registration Statement with respect
to the Plan Prerequisites (the "Amended Registration Statement"), the exhibits
thereto, the validity of the Registered Shares, or the Subscription Documents.
11.3 The Escrow Agent shall have no liability or obligation with
respect to the contents of the Escrow Accounts except for the Escrow Agent's
willful misconduct or gross negligence. The Escrow Agent's sole responsibility
shall be for the safekeeping, investment, and disbursement of the contents of
the Escrow Accounts in accordance with the terms of this Agreement.
11.4 The Escrow Agent shall have no implied duties or obligations and
shall not be charged with knowledge or notice of any fact or circumstance not
specifically set forth herein.
11.5 The Escrow Agent is not familiar with, and has no knowledge of,
either the Offering Documents or the Subscription Documents.
11.6 In no event shall the Escrow Agent be liable for incidental,
indirect, special, consequential or punitive damages.
11.7 The Escrow Agent shall not be obligated to take any legal action
or commence any proceeding in connection with the contents of the Escrow
Accounts, this Agreement, or the Subscription Documents, or to appear in,
prosecute, or defend any such legal action or proceeding. The Escrow Agent may
consult legal counsel selected by it in the event of any dispute or question as
to the construction of any of the provisions hereof or any other agreement or of
its duties hereunder, and shall incur no liability and shall be fully protected
from any liability whatsoever in acting in accordance with the opinion or
instruction of such counsel. The Company shall promptly pay upon demand the
reasonable fees and expenses of such counsel and its paraprofessionals.
11.8 The Escrow Agent is authorized, in its sole discretion, to comply
with orders issued or process entered by any court situated within the State of
New Jersey with respect to the contents of the Escrow Accounts, without
determination by the Escrow Agent of such court's jurisdiction in the matter. If
any portion of the contents of the Escrow Accounts is at any time attached,
garnished, or levied upon under any order of any such court, or if the payment,
assignment, transfer, conveyance, or delivery of the contents of the Escrow
Accounts shall be stayed or enjoined by any order of any such court, or if any
order, judgment, or decree shall be made or entered by any court affecting the
contents of the Escrow Accounts, then in any such event, after a good faith
effort to notify the Company, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment, or
decree which it is advised by its legal counsel is binding upon the Escrow Agent
without the need for appeal or other action. If the Escrow Agent complies with
any such order, writ, judgment or decree, it shall not be liable to any of the
parties hereto or to any other person or entity by reason of such compliance
even though such order, writ, judgment, or decree may be subsequently reversed,
modified, annulled, set aside or vacated.
12. Fees and Expenses of Escrow Agent.
12.1 The Company shall compensate the Escrow Agent for its services
hereunder in accordance with the fee schedule of the Escrow Agent and, in
addition, shall reimburse Escrow Agent for all of its reasonable out-of-pocket
expenses, including, without limitation, attorneys' fees, telephone and
facsimile transmission costs, postage (including express mail or overnight
delivery charges), copying charges and the like. The obligations of Company
under this section shall survive any termination of this Agreement and the
resignation or removal of Escrow Agent.
12.2 The fee schedule of the Escrow Agent is annexed hereto as
Exhibit D and made a part hereof.
13. Consent to Jurisdiction and Venue.
In the event that any party hereto or an commences a lawsuit or other
proceeding relating to or arising from this Agreement, the parties hereto agree
that the Superior Court of New Jersey shall have the sole and exclusive
jurisdiction over any such proceedings.
14. Notices.
All notices and other communications hereunder shall be in writing and shall be
dispatched by a recognized professional overnight courier or by telefax with
telephone confirmation and addressed to the party to be notified as follows:
If to Company, to: Hollow Egg One, Inc., c/o Milling Law Offices, 000 Xxxxx
Xxxx, Xxxxxxxx 00, Xxxxxxxxx, XX 00000, attention of Xxxx
X. Xxxxxxx, telephone 000-000-0000, telefax 000-000-0000
If to Escrow Agent, to: Valley National Bank, Trust Department, 0000 Xxxxxxx
Xxxxxxxx, Xxxxx, XX 00000, attention of Xxxxxx
Xxxxxxxxx, Vice President, telephone 000-000-0000,
telefax 000-000-0000
or to such other address as each party may designate for itself by like notice.
15. Representations and Warranties of the Company.
The Company makes the following representations and warranties to the Escrow
Agent:
15.1 The Company is a corporation duly organized, validly existing, and
in good standing under the laws of its state of incorporation and has full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder;
15.2 This Agreement has been duly approved by all necessary shareholder
and board of directors action of the Company, has been executed by duly
authorized officers of Company, and constitutes a valid and binding agreement of
Company, enforceable in accordance with its terms.
15.3 The execution, delivery, and performance by Company of this
Agreement is in accordance with the Subscription Documents and will not violate,
conflict with, or cause a default under the articles of incorporation or bylaws
of Company, any applicable law or regulation, any court order or administrative
ruling or decree which Company is a party or any of its property is subject, or
any agreement, contract, indenture, or other binding arrangement, including
without limitation the Subscription Documents to which Company is a party or any
of its property is subject.
15.4 The individuals listed on the Company's Specimen Signature
Schedule have been duly appointed to act as the representatives of Company
hereunder and each acting independently has full power and authority to execute,
deliver, and perform this Agreement, to execute and deliver any notice required
hereunder, to amend, modify or waive any provision of this Agreement and to take
any and all other actions as the Company Representative under this Agreement,
all without further consent or direction from, or notice to, Company or any
other party.
15.5 All of the representations and warranties of the Company contained
herein are true and complete as of the date hereof and will be true and complete
at the time of any disbursement or delivery from the Escrow Accounts.
15.6 The Company's Specimen Signature Schedule is annexed hereto as
Exhibit E and made a part hereof.
16. General.
16.1 Amendment or Waiver. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by a Company Representative on
behalf of the Company and Escrow Agent. No delay or omission by any party in
exercising any right with respect hereto shall operate as a waiver. A waiver on
any one occasion shall not be construed as a bar to, or waiver of, any right or
remedy on any future occasion.
16.2 Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
16.3 Governing Law. This Agreement shall be construed and interpreted
in accordance with the internal laws of the State of New Jersey without giving
effect to the conflict of laws principles thereof, which, if applied, would
cause the law of any jurisdiction to apply.
16.4 Entire Agreement; No Third Party Beneficiaries. This Agreement
sets forth in their entirety the obligations and duties of Escrow Agent with
respect to the Escrow Accounts. Investors, and the Company may have additional
rights and obligations respecting the Escrow Accounts under the Subscription
Documents. No third party shall be a beneficiary of this Agreement, or derive
any rights or benefits, or have any causes of action, hereunder.
16.5 Binding Effect. All of the terms of this Agreement, as amended
from time to time, shall be binding upon, insure to the benefit of and be
enforceable by the Company, by the Escrow Agent and by their respective
successors and assigns.
16.6 Dealings. The Escrow Agent and any stockholder, director, officer
or employee of Escrow Agent may buy, sell, and deal in any of the securities of
the Company and its affiliates and become pecuniarily interested in any
transaction in which the Company may be in interest, and contract and lend money
to the Company or to any Investor and otherwise act as fully and freely as
though it were not the Escrow Agent under this Agreement. Nothing herein shall
preclude the Escrow Agent from acting in any other capacity for the Company, for
any Investor or for any other entity.
16.7 Assignment. No party to this Agreement may assign its rights or
delegate its obligations under this Agreement without the express written
consent of the other parties, except as otherwise set forth in this Agreement.
16.8 Headings. The section headings contained in this Agreement are
intended to be employed solely and exclusively for the convenience of the
parties, are not the subject of any agreement among the parties, and shall have
no effect of any kind on the interpretation of this Agreement or of any terms or
provisions thereof.
16.9 Counterparts. This Agreement may be executed in counterparts, a
complete set of which shall be deemed to comprise a single Agreement.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed by their respective corporate officers, thereunto duly authorized.
VALLEY NATIONAL BANK
By ______________________________________
----------------------------------------
(Print Name and Title)
HOLLOW EGG ONE INC.
By ______________________________________
----------------------------------------
(Print Name and Title)
EXHIBIT A
RULES 419, 15g-8 AND 10b-9
RULE 419. OFFERINGS BY BLANK CHECK COMPANIES
(a) Scope of the Rule and Definitions.
(1) The provisions of this section shall apply to every registration
statement filed under the Act relating to an offering by a blank check company.
(2) For purposes of this section, the term "blank check company" shall
mean a company that:
(i) Is a development stage company that has no specific
business plan or purpose or has indicated that its business plan is to engage in
a merger or acquisition with an unidentified company or companies, or other
entity or person; and
(ii) Is issuing "xxxxx stock," as defined in Rule 3a51-1 under
the Securities Exchange Act of 1934 ("Exchange Act").
(3) For purposes of this section, the term "purchaser" shall mean any
person acquiring securities directly or indirectly in the offering, for cash or
otherwise, including promoters or others receiving securities as compensation in
connection with the offering.
(b) Deposit of Securities and Proceeds in Escrow or Trust Account.
(I) General.
(i) Except as otherwise provided in this section or prohibited
by other applicable law, all securities issued in connection with an offering by
a blank check company and the gross proceeds from the offering shall be
deposited promptly into:
(A) An escrow account maintained by an "insured
depository institution," as that term is defined in Section 3(c)(2) of the
Federal Deposit Insurance Act; or
(B) A separate bank account established by a broker
or dealer registered under the Exchange Act maintaining net capital equal to or
exceeding $25,000 (as calculated pursuant to Exchange Act Rule 15c3-1), in which
the broker or dealer acts as trustee for persons having the beneficial interests
in the account.
(ii) If funds and securities are deposited into an escrow
account maintained by an insured depository institution, the deposit account
records of the insured depository institution must provide that funds in the
escrow account are held for the benefit of the purchasers named and identified
in accordance with Rule 330.1 of the regulations of the Federal Deposit
Insurance Corporation, and the records of the escrow agent, maintained in good
faith and in the regular course of business, must show the name and interest of
each party to the account. If funds and securities are deposited in a separate
bank account established by a broker or dealer acting as a trustee, the books
and records of the broker-dealer must indicate the name, address, and interest
of each person for whom the account is held.
(2) Deposit and Investment of Proceeds.
(i) All offering proceeds, after deduction of cash paid for
underwriting commissions, underwriting expenses and dealer allowances, and
amounts permitted to be
released to the registrant pursuant to paragraph (b)(2)(vi) of this section,
shall be deposited promptly into the escrow or trust account; provided, however,
that no deduction may be made for underwriting commissions, underwriting
expenses or dealer allowances payable to an affiliate of the registrant.
(ii) Deposited proceeds shall be in the form of checks,
drafts, or money orders payable to the order of the escrow agent or trustee.
(iii) Deposited proceeds and interest or dividends thereon, if
any, shall be held for the sole benefit of the purchasers of the securities.
(iv) Deposited proceeds shall be invested in one of the
following:
(A) An obligation that constitutes a "deposit," as
that term is defined in Section (3) (1) of the Federal Deposit Insurance Act;
(B) Securities of any open-end investment company
registered under the Investment Company Act of 1940 that holds itself out as a
money market fund meeting the conditions of paragraphs (c) (2), (c) (3), and (c)
(4) of Rule 2a-7 under the Investment Company Act; or
(C) Securities that are direct obligations of, or
obligations guaranteed as to principal or interest by, the United States.
Note to Rule 419(6)(2)(iv). Issuers are cautioned that
investments in government securities are inappropriate unless such securities
can be readily sold or otherwise disposed of for cash at the time required
without any dissipation of offering proceeds invested.
(v) Interest or dividends earned on the funds, if any, shall
be held in the escrow or trust account until the funds are released in
accordance with the provisions of this section. If funds held in the escrow or
trust account are released to a purchaser of the securities, the purchaser shall
receive interest or dividends earned, if any, on such funds up to the date of
release. If funds held in the escrow or trust account are released to the
registrant, interest or dividends earned on such funds up to the date of release
may be released to the registrant.
(vi) The registrant may receive up to 10 percent of the
proceeds remaining after payment of underwriting commissions, underwriting
expenses and dealer allowances permitted by para-graph (b)(2)(i) of this
section, exclusive of interest or dividends, as those proceeds are deposited
into the escrow or trust account.
(3) Deposit of Securities.
(i) All securities issued in connection with the offering,
whether or not for cash consideration, and any other securities issued with
respect to such securities, including securities issued with respect to stock
splits, stock dividends, or similar rights, shall be deposited directly into the
escrow or trust account promptly upon issuance. The identity of the purchaser of
the securities shall be included on the stock certificates or other documents
evidencing such securities. See also Rule 15g-8 regarding restrictions on sales
of, or offers to sell, securities deposited in the escrow or trust account.
(ii) Securities held in the escrow or trust account are to
remain as issued and deposited and shall be held for the sole benefit of the
purchasers, who shall have voting rights, if any, with respect to securities
held in their names, as provided by applicable state law. No transfer or other
disposition of securities held in the escrow or trust account or any interest
related to such securities shall be permitted other than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Internal
Revenue Code of 1986 as amended, or Title I of the Employee Retirement Income
Security Act, or the rules thereunder.
(iii) Warrants, convertible securities or other derivative
securities relating to securities held in the escrow or trust account may be
exercised or converted in accordance with their terms; provided, however, that
securities received upon exercise or conversion, together with any cash or other
consideration paid in connection with the exercise or conversion, are promptly
deposited into the escrow or trust account.
(4) Escrow or Trust Agreement.
A copy of the executed escrow or trust agreement shall be
filed as an exhibit to the registration statement and shall contain the
provisions of paragraphs (b)(2), (b)(3), and (e)(3) of this section.
(5) Request For Supplemental Information.
Upon request by the Commission or the staff, the registrant
shall furnish as supplemental information the names and addresses of persons for
whom securities are held in the escrow or trust account.
Note to Rule 419(b). With respect to a blank check offering
subject to both Rule 419 and Exchange Act Rule 15c2-4, the requirements of Rule
15c2-4 are applicable only until the conditions of the offering governed by that
rule are met (e.g., reaching the minimum in a "part-or-none" offering). When
those conditions are satisfied, Rule 419 continues to govern the use of offering
proceeds.
(c) Disclosure of Offering Terms.
The initial registration statement shall disclose the specific terms of
the offering, including, but not limited to:
(1) The terms and provisions of the escrow or trust agreement and the
effect thereof upon the registrant's right to receive funds and the effect of
the escrow or trust agreement upon the purchaser's funds and securities required
to be deposited into the escrow or trust account, including, if applicable, any
material risk of non-insurance of purchasers' funds resulting from deposits in
excess of the insured amounts; and
(2) The obligation of the registrant to provide, and the right of the
purchaser to receive, information regarding an acquisition, including the
requirement that pursuant to this section, purchasers confirm in writing their
investment in the registrant's securities as specified in paragraph (e) of this
section.
(d) Probable Acquisition Post-Effective Amendment Requirement.
If, during any period in which offers or sales are being made, a
significant acquisition becomes probable, the registrant shall file promptly a
post-effective amendment disclosing the information specified by the applicable
registration statement form and Industry Guides, including financial statements
of the registrant and the company to be acquired as well as pro forma financial
information required by the form and applicable rules and regulations. Where
warrants, rights or other derivative securities issued in the initial offering
are exercisable, there is a continuous offering of the underlying security.
(e) Release of Deposited and Funds Securities.
(1) Post-Effective Amendment For Acquisition Agreement.
Upon execution of an agreement(s) for the acquisition(s) of a
business(es) or assets that will constitute the business (or a line of business)
of the registrant and for which the fair value of the business(es) or net assets
to be acquired represents at least 80 percent of the maximum offering proceeds,
including proceeds received or to be received upon the exercise or conversion of
any securities offered, but excluding amounts payable to non-affiliates for
underwriting commissions, underwriting expenses, and dealer allowances, the
registrant shall file a post-effective amendment that:
(i) Discloses the information specified by the applicable
registration statement form and Industry Guides, including financial statements
of the registrant and the company acquired or to be acquired and pro forma
financial information required by the form and applicable rules and regulations;
(ii) Discloses the results of the initial offering, including
but not limited to:
(A) The gross offering proceeds received to date,
specifying the amounts paid for underwriter commissions, underwriting expenses
and dealer allowances, amounts disbursed to the registrant, and amounts
remaining in the escrow or trust account; and
(B) The specific amount, use and application of funds
disbursed to the registrant to date, including, but not limited to, the amounts
paid to officers, directors, promoters, controlling shareholders or affiliates,
either directly or indirectly, specifying the amounts and purposes of such
payments; and
(iii) Discloses the terms of the offering as described
pursuant to paragraph (e) (2) of this section.
(2) Terms of the Offering.
The terms of the offering must provide, and the registrant
must satisfy, the following conditions:
(i) Within five business days after the effective date of the
post-effective amendment(s), the registrant shall send by first class mail or
other equally prompt means, to each purchaser of securities held in escrow or
trust, a copy of the prospectus contained in the post-effective amendment and
any amendment or supplement thereto;
(ii) Each purchaser shall have no fewer than 20 business days
and no more than 45 business days from the effective date of the post-effective
amendment to notify the registrant in writing that the purchaser elects to
remain an investor. If the registrant has not received such written notification
by the 45th business day following the effective date of the post-effective
amendment, funds and interest or dividends, if any, held in the escrow or trust
account shall be sent by first class mail or other equally prompt means to the
purchaser within five business days;
(iii) The acquisition (s) meeting the criteria set forth in
paragraph (e) (1) of this section will be consummated if a sufficient number of
purchasers confirm their investments; and
(iv) If a consummated acquisition(s) meeting the requirements
of this section has not occurred by date 18 months after the effective date of
the initial registration statement, funds held in the escrow or trust account
shall be returned by first class mail or equally prompt means to the purchaser
within five business days following that date.
(3) Conditions For Release of Deposited Securities and Funds.
Funds held in the escrow or trust account may be released to
the registrant and securities may be delivered to the purchaser or other
registered holder identified on the deposited securities only at the same time
as or after:
(i) The escrow agent or trustee has received a signed
representation from the registrant, together with other evidence acceptable to
the escrow agent or trustee, that the requirements of paragraphs (e)(1) and
(e)(2) of this section have been met; and
(ii) Consummation of an acquisition(s) meeting the
requirements of paragraph (e)(2)(iii) of this section.
(4) Prospectus Supplement.
If funds and securities are released from the escrow or trust
account to the registrant pursuant to this paragraph, the prospectus shall be
supplemented to indicate the amount of funds and securities released and the
date of release.
Notes to Rule 419(e).
1. With respect to a blank check offering subject to both Rule 419 and
Exchange Act Rule 10b-9, the requirements of Rule l0b-9 are applicable only
until the conditions of the offering governed by that rule are met (e.g.,
reaching the minimum in a "part- or-none" offering). When those conditions are
satisfied, Rule 419 continues to govern the use of offering proceeds.
2. If the business(es) or assets are acquired for cash, the fair value
shall be presumed to be equal to the cash paid. If all or part of the
consideration paid consists of securities or other non-cash consideration, the
fair value shall be determined by an accepted standard, such as bona fide sales
of the assets or similar assets made within a reasonable time, forecasts of
expected cash flows, independent appraisals, etc. Such valuation must be
reasonable at the time made.
(f) Financial Statements. The registrant shall:
(1) Furnish to security holders audited financial statements for the
first full fiscal year of operations following consummation of an acquisition
pursuant to paragraph (e) of this section, together with the information
required by Item 303 (a) of Regulation S-K, no later than 90 days after the end
of such fiscal year; and
(2) File the financial statements and additional information with the
Commission under cover of Form 8-K; provided, however, that such financial
statements and related information need not be filed separately if the
registrant is filing reports pursuant to Section 13(a) or 15(d) of the Exchange
Act.
RULE 15G-8. SALES OF ESCROWED SECURITIES OF BLANK CHECK COMPANIES
As a means reasonable designed to prevent fraudulent, deceptive, or
manipulative act or practices, t shall be unlawful for any person to sell or
offer to sell any security that is deposited and held in an escrow or trust
account pursuant to Rule 419 under the Securities Act of 1933, or any interest
in or related to such security, other than pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986, as amended, or
Title I of the Employee Retirement Income Security Act, or the rules thereunder.
RULE 10B-9. PROHIBITED REPRESENTATIONS IN CONNECTION WITH CERTAIN
OFFERINGS
(a) It shall constitute a manipulative or deceptive device or
contrivance, as used in Section 10(b) of the Act, for any person, directly or
indirectly, in connection with the offer or sale of any security, to make any
representation:
(1) To the effect that the security is being offered or sold
on an "all-or-none" basis, unless the security is part of an offering or
distribution being made on the condition that all or a specified amount of the
consideration paid for such security will be promptly refunded to the purchaser
unless
(A) all the securities being offered are sold at a
specified price within a specified time, and
(B) the total amount due to the seller is received by
him by a specified date ;or
(2) To the effect that security is being offered or sold on
any other basis whereby all or part of the consideration paid for any such
security will be refunded to the purchaser if all or some of the securities are
not sold, unless the security is part of an offering or distribution being made
on the condition that all or a specified part of the consideration paid for such
security will be promptly refunded to the purchaser unless
(A) a specified number of units of the security are
sold at a specified price within a specified time, and
(B) the total amount due to the seller is received by
him by a specified date.
(b) This rule shall not apply to any offer or sale of securities as to
which the seller has a firm commitment form underwriters or others (subject only
to customary condition precedent, including "market outs") for the purchase of
all the securities being offered.
EXHIBIT B
SUBSCRIPTION AGREEMENT (SUBSCRIPTION RIGHTS)
[Exhibit B is filed as Exhibit 1.4 to the registration statement. The document
to which Exhibit B is attached is filed as Exhibit 1.1 to the registration
statement.]
EXHIBIT C
SUBSCRIPTION AGREEMENT (GENERAL)
[Exhibit C is filed as Exhibit 1.5 to the registration statement. The document
to which Exhibit C is attached is filed as Exhibit 1.1 to the registration
statement.]
EXHIBIT D
FEES PAYABLE TO ESCROW AGENT
Administration Fee.
Annual Administration Fee
(In advance-- no pro-ration) $2,500.00 (includes first 25 Investors)
After 25 Investors $10.00 per Investor
One-Time Setup Fee. $ ? ? ? ? ?
Activity Charges.
Returned Checks $25.00 each
Wire to Investors. $15.00 each domestic
$25.00 each foreign
1099 Preparation and Reporting. No charge for first 25
Investors,
After 25 Investors $10.00 per Investor
EXHIBIT E
SPECIMEN SIGNATURES OF REPRESENTATIVES
COMPANY REPRESENTATIVE(S)
Name Specimen Signature
Xxxx X. Xxxxxxx XXXX X. XXXXXXX
Xxxxxx X. Xxxxxx XXXXXX X. XXXXXX
EXHIBIT F
LETTER REPRESENTATIONS AND INSTRUCTIONS BY COMPANY TO ESCROW AGENT
1. FORMS OF CLOSING AND SIGNATURE BLOCKS:
All such letters shall be signed in behalf of the Company and shall end
with the following final paragraph and closing. The letters shall use the
signature block. In the sections below setting forth the texts of the letters,
the instructions "[signed by Company]" shall be complied with by utilizing the
signature block set forth below.
"This letter may be executed in counterparts, which, when taken
together, shall be deemed a single original."
"Very truly yours,"
Hollow Egg One Inc.
By______________________________
--------------------------------
(Print Name)
Title: Company Representative
Date:___________________________
2. INSIDE ADDRESS, ATTENTION, REFERENCE, GREETING AND OPENING
PARAGRAPH:
All such letters shall set forth the following inside address,
attention, reference, greeting and opening paragraph.
"Valley National Bank
Trust Department
0000 Xxxxxxx Xxxxxxxx
Xxxxx, XX 00000
Attention of Xxxxxx Xxxxxxxxx, Vice President
"Re: Escrow Agreement (the "Agreement") Among Hollow Egg One Inc. (the
"Company") and Valley National Bank ("Escrow Agent") dated as of
___________________, 2002
"Dear Sirs and Mesdames:
"All terms set forth in this letter shall have the meanings set forth
in the Agreement."
3. TEXTS OF LETTERS.
The letters shall contain one or another of the following texts:
3.1 Confirmation That Escrow Agreement Delivered to all Investors.
"The undersigned hereby confirm that the following Investors
whose names appear on the schedule annexed hereto have been given a copy of the
Subscription Agreement." [signed by the Company]
3.2 Instructions for Disposition of Offering Proceeds During
Offering or at Termination of Offering.
"You are holding a Funds Escrow Account respecting the
Offering. The contents of such account and all interest or dividends accrued
thereon are to be returned to each Investor in the amounts and at the addresses
as they appear in your records. The reason for this request is that all of the
Registered Shares have not been sold during the Offering Period, which has
expired, and/or the other conditions to disbursement of the contents of the
Funds Escrow Account have not been achieved." [signed by Company]
[or]
"You are holding a Funds Escrow Account respecting the
Offering. The contents of such account and all interest or dividends accrued
thereon are to be returned to each Investor in the amounts and at the addresses
as they appear in your records. The reason for this request is that all of the
Registered Shares have not been sold and the Company has elected to terminate
the Offering prior to the expiration of the Offering Period." [signed by
Company]
[or]
"You are holding a Funds Escrow Account respecting the
Offering. The Company has elected to cancel a portion in the amount of
$_________________of the subscription of the following Investor,
_______________________________. At such time as the amount of this subscription
has been fully collected, the amount of the cancelled portion of the
subscription, with accumulated interest or dividends, if any, is to be returned
to the Investor at the address indicated in the Investor's Subscription
Agreement and the balance retained in the Funds Escrow Account for the benefit
of such Investor." [signed by Company]
[or]
"You are holding a Funds Escrow Account respecting the
Offering. The Company has elected to reject in full the subscription in the
amount of $_________________of the following Investor,
_______________________________. At such time as the amount of this subscription
has been fully collected, this amount, with accumulated interest or dividends,
if any, is to be returned to the Investor at the address indicated in the
Investor's Subscription Agreement." [signed by Company]
[or]
"You are holding a Funds Escrow Account respecting the
Offering. The Offering has successfully been completed during the Offering
Period by way of the sale of all of the Registered Shares and the collection of
all of the Offering Proceeds in the principal amount of $250,000. The Offering
Period is accordingly ended and the Plan Period is accordingly commenced. You
are to deliver, by way of recognized courier service, your bank check in the
amount of $25,000 to Hollow Egg One Inc., payable to its order, and to continue
to hold the balance of the Offering Proceeds in the Funds Escrow Account, with
all interest or dividends thereon, for the sole interest of those persons having
a beneficial interest therein, in accordance with Rule 419 and the Plan. We
deliver to you herewith the Certificates, with respect to each of which
Certificates the certificate number, the amount of Registered Shares evidenced
thereby, and the ownership registration, is set forth in the schedule annexed
hereto. The Certificates are to be held by you in the Shares Escrow Account in
accordance with Rule 419 and the Plan. We further represent to you that (a) the
Subscription Documents are effective and, to the best of Company's knowledge, no
person or regulatory federal or state regulatory authority has taken or
threatened to take any action in connection with the Subscription Documents or
the Offering of the Shares pursuant thereto; (b) the conditions to the
completion of the Offering, i.e. the sale of all of the Registered Shares, have
been achieved and, to the best of Company's knowledge, no Investor has objected
or threatened to object to the release of the Escrow Funds; and (c) All periods
for the rescission of subscriptions applicable under New Jersey Statutes and the
New Jersey Code of Regulations, and under all other state and federal statutes,
rules or regulations, have expired." [signed by Company]
3.2 Instructions for Disposition of Offering Proceeds and
Certificates During or at Termination of Plan Period.
"You are holding a Funds Escrow Account and a Shares Escrow
Account with respect to the Company's Plan and the provisions of Rule 419. The
Company has, to date, been unsuccessful in implementing its Plan to engage in a
merger or acquisition with an unidentified
company or companies and does not foresee accomplishing a successful
implementation of its Plan in the future. Accordingly, the Company has elected
to terminate its Plan. Based on the requirements of Rule 419, you are instructed
that the contents of the Funds Escrow Account and all interest or dividends
accrued thereon are promptly to be returned to each Investor in the amounts and
at the addresses as they appear in your records. The Certificates in the Shares
Escrow Account are to be returned to the Company." [signed by Company]
[or]
"You are holding a Funds Escrow Account and a Shares Escrow
Account with respect to the Company's Plan and the provisions of Rule 419.
Eighteen months since the effective date of the Initial Registration Statement
will have passed on ______________________. The Company has, to date, been
unsuccessful in implementing its Plan to engage in a merger or acquisition with
an unidentified company or companies. Based on the requirements of Rule 419, you
are instructed that the contents of the Funds Escrow Account and all interest or
dividends accrued thereon are promptly, and in all events not later than five
business days from the above mentioned date, to be returned to each Investor in
the amounts and at the addresses as they appear in your records. The
Certificates in the Shares Escrow Account are to be returned to the Company."
[signed by Company]
[or]
"You are holding a Funds Escrow Account and a Shares Escrow
Account with respect to the Company's Plan and the provisions of Rule 419. The
Company has filed a post- effective amendment to the Initial Registration
Statement and, within five business days after the effective date thereof, has
sent to each Investor a copy of the prospectus contained in the said
post-effective amendment, in accordance with the requirements of Rule
419(e)(2)(i). The Investors who do not, within 45 business days following the
effective date of the said post-effective amendment, provide the Company with
written confirmation of their intent to remain an Investor in the Registered
Shares, shall be entitled to a refund from the Funds Escrow Account of their
subscription price for the Registered Shares, together with interest and
dividends, if any. The forty- fifth business day following the said effective
date is ______________________. On the foregoing date the Company shall advise
you of the name and mailing address of each Investors from whom the Company has
not received such written confirmation. You are instructed to refund to each
such Investor, by first class mail or other equally prompt means, from the Funds
Escrow Account, within five business days from the said forty-fifth business
day, the full refund of such Investor's subscription price, together with
interest and dividends, if any, in accordance with the requirements of Rule
419(e)(2)(ii).
"The Company hereby represents to you the following: (a) The
requirements of paragraphs (e)(1) and (e)(2) of Rule 419 have been met by the
Company; (b) the Company has consummated an acquisition(s) meeting the
requirements of paragraph (e)(2)(iii) of Rule 419. In support of the foregoing
representations the Company delivers to you herewith the following: (a) a copy
of paragraphs (e)(1), (2) and (3) of Rule 419; (b) the post-effective amendment
to the Initial Registration Statement complying with the requirements of Rule
419(e)(1); (c) a list of those Investors, as they appear on your records, who
have confirmed their investments in the Registered Shares; (d) the executed
merger agreement(s) and certificate(s) or the executed acquisition agreement(s)
between the Company and the reverse acquirer(s) thereof; (e) the executed
closing documents with respect to the merger or acquisition. Based on the
foregoing, the Company requests that you pay over to it the entire balance held
in the Funds Escrow Account after deduction of all fees and expenses due to you.
The Company further requests that you send to each Investor, who shall have
confirmed such Investor's intent to remain an Investor in the Registered Shares,
at such Investor's mailing address as it appears on your records, such
Investor's Certificate(s) held in the Shares Escrow Account and that all other
Certificates in the Shares Escrow Account be returned to the Company. [signed by
Company]
