FORM OF ESCROW AGREEMENT
Exhibit
10.7
This
Escrow Agreement (the “Agreement”) is made by and between Xxxxxxxx Xxxxx LLP, a
New York limited liability partnership, with its principal office located at
000
Xxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, XX 00000 (the “Escrow Agent”), and Seguso Holdings, Inc., a New York
corporation, with its principal office located at 0000 00xx Xxxxx Xxxx, #X000,
Xxxxxxxxx, XX 00000 (the “Issuer”).
W
I T N E S S E T H:
WHEREAS,
the Issuer has filed with the Securities and Exchange Commission (the
“Commission”), Washington, D.C., an SB-2 Registration Statement (the
“Registration Statement”), and related Prospectus, File No. 333-122697, declared
effective by the Commission on October 26, 2007, in connection with an initial
public offering (the “Offering”) of the Issuer’s securities, comprising 500,000
shares of the Issuer’s common stock to be sold at a price of $0.10 per share
(the “Securities”), which shall be purchased by any investor in not less than
5,000 shares and in multiples of 100;
WHEREAS,
the Issuer proposes to offer the Securities to the public on a “best efforts,
all or none” basis as set forth in the Registration Statement;
WHEREAS,
the Offering is to be made in accordance with Rule 419 (“Rule 419”) under the
Securities Act of 1933, as amended (the “Act”) and the Offering has been
registered with the Commission;
WHEREAS,
the Company desires to establish an escrow account (the “Escrow Account”) in
which funds received from subscribers and securities issued in connection with
the offering will be deposited pending completion of the escrow period. The
Escrow Agent has agreed to maintain an escrow account with Sterling National
Bank, an insured depository institution in accordance with Rule 419(b)
(1)(i)(A), and the Escrow Agent in accordance with the terms and conditions
set
forth herein as more specifically directed under Rule 419.
WHEREAS,
the proceeds deposited in the Escrow Account are to be released to the Company
only in the event of the consummation of a business combination in accordance
with the terms hereof, and within the time set forth herein, and otherwise
the
escrowed proceeds are to be returned to the purchasers of the Securities in
accordance with the terms and conditions set forth herein, and all as
specifically directed under Rule 419.
NOW,
THEREFORE, for and in consideration of the promises and mutual covenants herein
contained, and other valuable consideration, the parties hereto hereby agree
as
follows:
1. THE
REGISTRATION STATEMENT.
1.1 The
Registration Statement is included herein as Exhibit
A
to this
Agreement, and is made a part hereof.
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2.
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ESTABLISHMENT
OF THE ESCROW ACCOUNT.
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2.1 The
Issuer shall establish a non-interest-bearing Escrow Account maintained by
the
Escrow Agent. The purpose of the Escrow Account is for (a) the deposit of all
subscription funds (checks, drafts or money orders ) which are received by
the
Issuer from prospective purchasers of the Securities and are delivered by the
Issuer to the Escrow Agent; (b) the holding of amounts of subscription funds
which are collected through the banking system, (c) the holding of securities
issued in connection with the offering, and (d) the disbursement of collected
funds and securities, all as described herein.
2.2 The
Issuer has notified the Escrow Agent in writing of the effective date (the
“Effective Date”) of the Registration Statement, and the date when the business
combination must be completed, namely April 26, 2009.
2.3 The
offering period (the “Offering Period”), which commenced on October 26, 2007
(the “Effective Date”), shall end on April 23, 2008. The Offering Period shall
be extended by an extension period only if the Escrow Agent shall have received
written notice thereof at least five business days prior to the expiration
of
the Offering Period. The extension period, which shall be deemed to commence
the
next calendar day following the expiration of the Offering Period, shall consist
of the number of calendar days or business days set forth in the Registration
Statement. The last day of the Offering Period, or the last day of the extension
period, is referred to herein as the “Termination Date.” Except
as provided in Section 4.3 hereof, after the Termination Date, the Issuer shall
not deposit, and the Escrow Agent shall not accept, any additional amounts
representing payments by prospective purchasers.
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3.
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DEPOSITS
TO THE ESCROW ACCOUNT.
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3.1 The
Issuer shall promptly deliver to the Escrow Agent all Securities issued to,
and
all funds which it receives from, prospective purchasers of the Securities,
which funds shall be in the form of checks, drafts or money orders .
Upon
the Escrow Agent’s receipt of such Securities and funds, they shall be credited
to the Escrow Account. All checks delivered to the Escrow Agent shall be made
payable to Xxxxxxxx Xxxxx LLP Escrow Account for Seguso Holdings, Inc.
Any
checks payable other than to the Escrow Agent as required hereby shall be
returned to the prospective purchaser.
3.2 Promptly
after receiving subscription funds as described in Section 3.1, the Escrow
Agent
shall deposit the same into the Escrow Account. Amounts of funds so deposited
are hereinafter referred to as “Escrow Amounts.” The Escrow Agent shall cause to
process all Escrow Amounts for collection through the banking system.
Simultaneously with each deposit to the Escrow Account, the Issuer shall inform
the Escrow Agent in writing of the name, address and social security number
of
the prospective purchaser, the amount of Securities subscribed for by such
purchaser, and the aggregate dollar amount of such subscription (collectively,
the “Subscription Information”).
3.3 The
Escrow Agent shall not be required to accept for credit to the Escrow Account
checks which are not accompanied by the appropriate Subscription Information.
Payments by prospective purchasers shall not be deemed deposited in the Escrow
Account until the Escrow Agent has received in writing the Subscription
Information required with respect to such payments.
3.4 The
Escrow Agent shall not be required to accept in the Escrow Account any amounts
representing payments by prospective purchasers, whether by check, draft or
money order, except during the Escrow Agent’s regular business
hours.
3.5 Only
those Escrow Amounts, which have been deposited in the Escrow Account and which
have cleared the banking system and have been collected by the Escrow Agent,
are
herein referred to as the “Fund.”
3.6 If
the
proposed Offering is terminated before the Termination Date, the Escrow Agent
shall refund any portion of the Fund prior to disbursement of the Fund in
accordance with Article 4 hereof upon instructions in from the
Issuer.
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4.
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DISBURSEMENT
FROM THE ESCROW ACCOUNT.
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4.1 Subject
to Section 4.3 below, if by the close of regular banking hours on April 23,
2008, the Escrow Agent determines that the amount in the Fund is less than
the
minimum amount of the Offering, then the Escrow Agent shall promptly refund
to
each prospective purchaser the amount of payment received from such purchaser
which is then held in the Fund or which thereafter clears the banking system,
without interest thereon or deduction therefrom, by drawing checks on the Escrow
Account for the amounts of such payments and mail them to the purchasers. In
such event, the Escrow Agent shall promptly notify the Issuer of its
distribution of the Fund and return all Securities held by the Escrow Agent
to
the Issuer.
4.2 The
terms
of the Offering must provide, and the Issuer must satisfy, the following
conditions: within five business days after the effective date of the
post-effective amendment, the Issuer shall send by first class mail to each
purchaser of securities held in escrow, a copy of the prospectus contained
in
the post-effective amendment and any amendment or supplement thereto; 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
Issuer in writing that the purchaser elects to remain an investor. If the Issuer
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 escrow shall be sent by first class mail or other
equally prompt means to the purchaser within five business days; the acquisition
meeting the criteria set forth above will be consummated if a sufficient number
of purchasers confirm their investment with the Issuer; and if a consummated
acquisition meeting the requirements above has not occurred by a date 18 months
after the effective date of the Issuer’s initial registration statement, funds
held in escrow shall be returned by first class mail to the purchasers with
five
business days following that date. The Issuer shall promptly notify Escrow
Agent
if any of the above conditions are not timely satisfied.
4.3 Funds
held in the escrow account may be released to the Issuer and securities may
be
delivered to the purchaser only at the same time as or after: the
escrow agent has received a signed representation from the Issuer, together
with
other evidence acceptable to the escrow agent, that the requirements of
paragraphs (e)(1) and (e)(2) of Rule 419 have been met; and the escrow agent
has
received a signed representation from the Issuer, together with other evidence
acceptable to the escrow agent, that the requirements of paragraph (e)(2)(iii)
of Rule 419 have been met.
4.4 If
the
Escrow Agent has on hand at the close of business on the Termination Date any
uncollected amounts which when added to the Fund would raise the amount in
the
Fund to the minimum offering amount, and result in the Fund, the Collection
Period, consisting of the number of five (5) business days shall be utilized
to
allow such uncollected funds to clear the banking system.
4.5 Upon
disbursement of the Fund pursuant to the terms of this Article 4, the Escrow
Agent shall be relieved of all further obligations and released from all
liability under this Agreement. It is expressly agreed and understood that
in no
event shall the aggregate amount of payments made by the Escrow Agent exceed
the
amount of the Fund.
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5.
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RIGHTS,
DUTIES AND RESPONSIBILITIES OF THE ESCROW AGENT; INDEMNIFICATION.
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5.1 The
Escrow Agent shall notify the Issuer on a regular basis of the escrow amounts
which have been deposited in the Escrow Account and of the amounts, constituting
the Fund, which have cleared the banking system and have been collected by
the
Escrow Agent.
5.2 The
Escrow Agent shall not be responsible for or be required to enforce any of
the
terms or conditions of the Agreement with respect to the Issuer.
5.3 The
Escrow Agent shall not be required to accept from the Issuer any subscription
information pertaining to prospective purchasers unless such Subscription
Information is accompanied by checks or wire transfers meeting the requirement
of Section 3.1, nor shall the Escrow Agent be required to keep records of any
information with respect to payments deposited by the Issuer, except as to
the
amount of such payments; however, the Escrow Agent shall notify the Issuer
within a reasonable time of any discrepancy between the amount set forth in
any
subscription information and the amount delivered to the Escrow Agent therewith.
Such amount need not be accepted for deposit in the Escrow Agent until such
discrepancy has been resolved.
5.4 The
Escrow Agent shall be under no duty or responsibility to enforce collection
of
any check delivered to it hereunder. The Escrow Agent, within a reasonable
time,
shall return to the Issuer any check received which is dishonored, together
with
the Subscription Information which accompanied such check.
5.5 The
Escrow Agent shall be entitled to rely upon the accuracy, act in reliance upon
the contents, and assume the genuineness of any notice, instruction,
certificate, signature, instrument or other document which is given to the
Escrow Agent by the Issuer pursuant to this Agreement without the necessity
of
the Escrow Agent verifying its truth or accuracy. Thereof, the Escrow Agent
shall not be obligated to make any inquiry as to the authority, capacity,
existence or identity of any person purporting to give any such notice or
instructions or to execute any such certificate, instrument or other
document.
5.6 If
the
Escrow Agent is uncertain as to its duties or rights hereunder or shall receive
instructions with respect to the Escrow Account, the escrow amounts of the
Fund
which, in its sole determination, are in conflict either with other instructions
received by it or with any provision of this Agreement, it shall be entitled
to
hold the escrow amounts, the Fund or a portion thereof, in the Escrow Account
pending the resolution of such uncertainty to the Escrow Agent’s sole
satisfaction, by final judgment of a court of competent jurisdiction or
otherwise; or the Escrow Agent, at its sole option, may deposit with the Clerk
of a court of competent jurisdiction in a proceeding to which all parties in
interest are joined. Upon the deposit by the Escrow Agent of the Fund with
the
Clerk of any court, the Escrow Agent shall be relieved of all further
obligations and released from all liability hereunder.
5.7 The
Escrow Agent shall not be liable for any action taken or omitted hereunder,
or
for the misconduct of any employee, agent or attorney appointed by it, except
in
the case of willful misconduct or gross negligence. The Escrow Agent shall
be
entitled to consult with counsel of its own choosing and shall not be liable
for
any action taken, suffered or omitted by it in accordance with the advice of
such counsel.
5.8 The
Escrow Agent shall have no responsibility at any time to ascertain whether
or
not any security interest exists in the escrow amounts, the Fund or any part
thereof or to file any financing statement under the Uniform Commercial Code
with respect to the Fund or any part thereof.
5.9 The
Issuer agrees to indemnify the Escrow Agent and its officers, directors,
employees, agents, and shareholders (jointly and severally, the “Indemnitees”)
against, and hold them harmless of and from, any and all losses, liabilities,
costs, damages, and expenses, including, but not limited to, reasonable fees
and
disbursements for counsel of its own choosing (collectively, “Liabilities”),
that the Indemnitees may suffer or incur and which arise out of or relate to
this Agreement or any transaction to which this Agreement relates, unless such
Liability is the result of the willful misconduct or gross negligence of the
Indemnitees.
5.10 If
the
indemnification provided for in this Section 5 is applicable but is held to
be
unavailable, the Issuer shall contribute such amounts as are just and equitable
to pay or to reimburse the Indemnitees for the aggregate of any and all
Liabilities actually incurred by the Indemnitees as a result of or in connection
with any amount paid in settlement of any action, claim, or proceeding arising
out of or relating in any way to any actions or omissions of the
Issuer.
5.11 The
provisions of this Section 5 shall survive any termination of this Agreement,
whether by disbursement of the Fund, resignation of the Escrow Agent, or
otherwise.
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6.
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AMENDMENT;
RESIGNATION.
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6.1 This
Agreement may be altered or amended only with the written consent of the parties
hereto. The Escrow Agent may resign for any reason upon five business days’
written notice to the Issuer. Should the Escrow Agent resign as herein provided,
it shall not be required to accept any deposit, make any disbursement or
otherwise dispose of the escrow amounts, but its only duty shall be to hold
the
escrow accounts until they clear the banking system and the Fund for a period
of
not more than five business days following the effective date of such
resignation, at which time (a) if a successor escrow agent shall have been
appointed and written notice thereof shall have been given to the resigning
escrow agent by the Issuer and such successor escrow agent, then the resigning
escrow agent shall pay over to the successor escrow agent the Fund, less any
portion thereof previously paid out in accordance with this Agreement; or (b)
if
the resigning escrow agent shall not have received written notice signed by
the
Issuer and a successor escrow agent, then the resigning escrow agent shall
promptly refund the amount in the Fund to each prospective purchaser, without
interest thereon or deduction therefrom, and the resigning Escrow Agent shall
promptly notify the Issuer of its liquidation and distribution of the Fund;
whereupon, in either case, the Escrow Agent shall be relieved of all further
obligations and released from all liability under this Agreement. Without
limiting the provisions of Section 8 hereof, the resigning Escrow Agent shall
be
entitled to be reimbursed by the Issuer for any expenses incurred in connection
with its resignation, transfer of the Fund to a successor escrow agent
or
distribution of the Fund pursuant to this Section 6.
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7.
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REPRESENTATIONS
AND WARRANTIES.
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7.1 The
Issuer represents and warrants to the Escrow Agent that no party other than
the
parties hereto and the prospective purchasers have, or shall have, any claim
or
security interest in the Fund or any part thereof.
7.2 No
financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing the Fund or any
part
thereof.
7.3 The
Subscription Information submitted with each deposit shall, at the time of
submission and at the time of the disbursement of the Fund, be deemed a
representation and warranty that such deposit represents a bona fide payment
by
the purchaser described therein for the amount of Securities set forth in such
Subscription Information.
7.4 All
of
the information contained in the Registration Statement is, as of the date
hereof, and will be, at the time of any disbursement of the Fund, true and
correct.
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8.
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FEES
AND EXPENSES.
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8.1 The
Escrow Agent shall be entitled to an acceptance fee of $1,000 and an annual
administrative fee of $1,000, payable upon the execution of this Agreement.
In
addition, the Issuer agrees to reimburse the Escrow Agent for any reasonable
fees and expenses incurred in connection with this Agreement.
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9.
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GOVERNING
LAW AND ASSIGNMENT.
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9.1 This
Agreement shall be construed in accordance with and governed by the laws of
the
State of New York and shall be binding upon the parties hereto and their
respective successors and assigns; provided, however, that any assignment or
transfer by any party of its rights under this Agreement or with respect to
the
Fund shall be void as against the Escrow Agent unless (a) written notice thereof
shall be given to the Escrow Agent; and (b) the Escrow Agent shall have
consented in writing to such assignment or transfer.
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10.
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NOTICES.
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10. All
notices required to be given in connection with this Agreement shall be sent
by
registered or certified mail, return receipt requested, or by hand delivery
with
receipt acknowledged, or by Express Mail service offered by the United States
Post Office to the addresses set forth in the beginning of this Agreement or
such other address as the parties hereto may designate.
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11.
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SEVERABILITY.
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11.1 If
any
provision of this Agreement or the application thereof to any person or
circumstance shall be determined to be invalid or unenforceable, the remaining
provisions of this Agreement or the application of such provision to persons
of
circumstances other than those to which it is held invalid or unenforceable
shall not be affected thereby and shall be valid and enforceable to the fullest
extent permitted by law.
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12.
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EXECUTION
IN SEVERAL COUNTERPARTS; ENTIRE
AGREEMENT.
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12.1 This
Agreement may be executed in several counterparts or by separate instruments,
all of such counterparts and instruments shall constitute one agreement, binding
on all of the parties hereto.
12.2 This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, written or oral, of the parties in connection
therewith.
IN
WITNESS WHEREOF, the undersigned parties have executed this Agreement upon
proper legal authority as of the 1st
day of
April, 2008.
| XXXXXXXX XXXXX LLP | ||
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| By: | /s/ Xxxxxx X. Xxxxxxx | |
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Xxxxxx X. Xxxxxxx, Partner |
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SEGUSO
HOLDINGS, INC., a New York
corporation
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| By: | /s/ Xxxxxx Xxxxxx | |
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Xxxxxx Xxxxxx |
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