Exhibit 10.9
ESCROW AGREEMENT
AGREEMENT dated this __ day of May, 2004, among Xxxxxx Motorcycle Company,
Ltd., a Delaware corporation, having an address at 0000 Xxxxxxx #00 & Ridgewood
Road, Wall Township, New Jersey 07719 (the "Company"), Xxxxx Xxxxxxx & Co.,
Inc., having an address at 00 Xxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Underwriter") and HSBC Bank USA, a banking corporation and trust company
organized and existing under the laws of the State of New York, having offices
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as escrow agent (the "Escrow
Agent").
W I T N E S S E T H
WHEREAS, the Company has prepared and filed a Form SB-2 registration
statement and amendments thereto (Commission File No. 333-109119) with the U.S.
Securities and Exchange Commission (the "SEC") (such registration statement,
together with any amendments, supplements and exhibits thereto is hereinafter
referred to collectively as the "Registration Statement") in connection with the
planned initial public offering of a minimum 550,000 "Units" and a maximum
2,000,000 Units, at the offering price of $10.25 per Unit, for sale to the
public (the "Investors"), with each Unit being comprised of 2 shares of the
Company's common stock and 1 common stock purchase warrant; and
WHEREAS, the Company desires to establish a non-interest bearing escrow
account with the Escrow Agent into which the Underwriter shall deposit the
Investors' checks or wire transfers for the payment of money made payable to the
order of the Company's Escrow Account (as defined herein), and the Escrow Agent
is willing to accept said checks, wire transfers for the payment of money in
accordance with the terms hereinafter set forth; and
WHEREAS, the Company represents and warrants to the Escrow Agent that it
has not stated to any individual or entity that the Escrow Agent's duties will
include anything other than those duties stated in this Agreement; and
WHEREAS, the Company warrants to the Escrow Agent that a copy of the
Registration Statement and amendments thereto as well as the Subscription
Agreements to be entered into between the Company and the Investors, and all
other documents such party has delivered to prospective Investors that include
the Escrow Agent's name and duties, have been attached hereto as Schedule 1;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Delivery Of Escrow Funds
(a)(i) The Underwriter shall deliver to the Escrow Agent checks received
from each prospective Investor made payable to the order of " ____________
Escrow Account." The checks shall be deposited into an account at HSBC Bank USA
entitled "___________________ Escrow Account"(the "Escrow Account"), or
(ii) The Escrow Agent shall receive money directly from prospective
Investors by means of check or wire transfer. If by wire transfer, money shall
be wired to HSBC Bank USA, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, ABA
Number 000-000-000, HSBC Bank USA as the Escrow Agent for ., Account No.
___________. All such money shall be deposited into the Escrow Account.
(b) The collected funds deposited into the Escrow Account are hereinafter
referred to as the "Escrow Funds".
(c) ______ The Escrow Agent shall have no duty or responsibility to
enforce the collection or demand payment of any funds deposited into the Escrow
Account. If, for any reason, any check deposited into the Escrow Account shall
be returned unpaid to the Escrow Agent, the sole duty of the Escrow Agent shall
be to return the check to the Company.
(d) Promptly after checks and wire transfers are delivered to the Escrow
Agent from the Underwriter, the Underwriter shall provide the Escrow Agent with
the Investor's original Subscription Agreement, which shall include the
Investor's name, address and other applicable information (social security
number or employer identification number, if appropriate). The Escrow Agent
shall hold the Subscription Agreements pending release of the Escrow Funds as
provided in Section 2 below.
2. Release of Escrow Funds. The Escrow Funds shall be paid by the Escrow
Agent in accordance with the following:
(a) In the event that the Company and the Underwriter advise the Escrow
Agent in writing that the public offering described in the Registration
Statement has been withdrawn, the Escrow Agent shall promptly return the funds
paid by each prospective Investor, to said prospective Investor, without
interest.
(b) If prior to 3:00 P.M. (local New York City time) on the day, 90 days
following the effective date of the Registration Statement (the "Termination
Date"), the Escrow Agent receives written notification, in the form of Exhibit
A, attached hereto and made a part hereof, and signed by the Company and the
Underwriter, stating that the Termination Date has been extended to a date
stated therein (the "Final Termination Date") the date shall be so extended.
(c) Provided that the Escrow Agent does not receive a notice stated in
accordance with Section 2(a) above and there is at least $5,637,500 in the
Escrow Account on or prior to the Termination Date or the Final Termination Date
(if the Escrow Agent has, prior to the Termination Date, received a notice in
accordance with Section 2(b) hereof), the Escrow Agent shall promptly notify the
Company and the Underwriter of such fact in writing. The Escrow Agent shall
promptly disburse the Escrow Funds by wire transfer in accordance with written
instructions signed by the Company and the Underwriter and delivered by the
Company and the Underwriter to the Escrow Agent. After any such disbursement
that is effected prior to the Termination Date or the Final Termination Date (if
the Escrow Agent has, prior to the Termination Date, received a notice in
accordance with Section 2(b) hereof), deposits may continue to be made to the
Escrow Account in accordance with Section 1 hereof and the Escrow Agent shall
make additional disbursements of the Escrow Funds in accordance with this
Section 2(c).
(d) If by 3:00 P.M. (local New York City time) on the Termination Date
or the Final Termination Date (if the Escrow Agent has, prior to the Termination
Date, received a notice in accordance with Section 2(b) hereof), the Escrow
Agent has not received written instructions from the Company and the Underwriter
in accordance with Section 2(c) hereof, or there is a balance in the Escrow
Account of less than $5,637,500, the Escrow Agent shall promptly return the
Escrow Funds.
(e) The Escrow Agent shall not be required to pay any uncollected funds
or any funds which are not available for withdrawal.
3. Acceptance by The Escrow Agent. The Escrow Agent hereby accepts and agrees
to perform its obligations hereunder, provided that:
(a) The Escrow Agent may act in reliance upon any signature believed by
it to be genuine, and may assume that any person who has been designated by the
Company to give any written instructions, notice or receipt, or make any
statements in connection with the provisions hereof has been duly authorized to
do so. The Escrow Agent shall have no duty to make inquiry as to the
genuineness, accuracy or validity of any statements or instructions or any
signatures on statements or instructions. The names and true signatures of each
individual authorized to act on behalf of the Company and are stated in Schedule
A, which is attached hereto and made a part hereof.
(b) The Escrow Agent may act relative hereto in reliance upon advice of
counsel in deference to any matter connected herewith. The Escrow Agent shall
not be liable for any mistake of fact or error of judgement or law, or for any
acts or omissions of any kind, unless caused by its willful misconduct or gross
negligence.
(c) The Company agrees to indemnify and hold the Escrow Agent harmless
from and against any and all claims, losses, costs, liabilities, damages, suits,
demands, judgements or actual out-of-pocket expenses (including but not limited
to reasonable attorney's fees) claimed against or incurred by the Escrow Agent
arising out of related, directly or indirectly, to this Agreement, unless caused
by the Escrow Agent's willful misconduct or gross negligence.
(d) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder, the Escrow Agent shall be entitled to (i) refrain
from taking any action or other than to keep safely the Escrow Funds until it
shall be directed otherwise by a court of competent jurisdiction, or (ii)
deliver the Escrow Funds to a court of competent jurisdiction.
(e) The Escrow Agent shall have no duty, responsibility or obligation to
interpret or enforce the terms of any agreement other than the Escrow Agent's
obligations hereunder, and the Escrow Agent shall not be required to make a
request that any monies be delivered to the Escrow Account, it being agreed that
the sole duties and responsibilities of the Escrow Agent shall be (i) to accept
checks and wire transfers delivered to the Escrow Agent for the Escrow Account
and deposit said checks and wire transfers into the Escrow Account, (ii) to
notify the Underwriter and the Company of its receipt of funds, (iii) to
disburse or refrain from disbursing the Escrow Funds in accordance with Section
2 hereof, provided that the checks received by the Escrow Agent have been
collected and are available for withdrawal.
4. Resignation and Termination of the Escrow Agent
(a) Resignation. The Escrow Agent may resign at any time by giving 30
days' written notice of such resignation to the Underwriter and the Company.
Upon providing such notice, the Escrow Agent shall have no further obligation
hereunder except to hold the Escrow Funds which it has received as of the date
on which it provided the notice of resignation as depositary. In such event, the
Escrow Agent shall not take any action until the Underwriter and the Company has
designated a banking corporation, trust company, attorney or other person as
successor (the "Successor Escrow Agent"). Upon receipt of such written
instructions signed by the Underwriter and the Company and the Placement Agent,
the Escrow Agent shall promptly deliver the Escrow Funds, net of any outstanding
charges, to such successor and shall thereafter have no further obligations
hereunder. If such instructions are not received within 30 days following the
effective date of such resignation, then the Escrow Agent may deposit the Escrow
Funds and any other amounts held by it pursuant to this Agreement with a clerk
of a court of competent jurisdiction pending the appointment of a Successor
Escrow Agent. In either case provided for in this Section 4, the Escrow Agent
shall be relieved of all further obligations and released from all liability
thereafter arising with respect to the Escrow Funds and all income earned
thereon.
(b) Termination. The Company may terminate the appointment of the Escrow
Agent hereunder upon written notice specifying the date upon which such
termination shall take effect. In the event of such termination, the Company
shall, within 30 days of such notice, appoint a Successor Escrow Agent and the
Escrow Agent shall, upon receipt of written instructions signed by the Company
and the Underwriter turn over to such Successor Escrow Agent all of the Escrow
Funds; provided, however, that if the Company fails to appoint a Successor
Escrow Agent within such 30-day period, such termination notice shall be null
and void and the Escrow Agent shall continue to be bound by all of the
provisions hereof. Upon receipt of the Escrow Funds, the Successor Escrow Agent
shall become the Escrow Agent hereunder and shall be bound by all of the
provisions hereof and the original Escrow Agent shall be relieved of all further
obligations and released from all liability thereafter arising with respect to
the Escrow Funds.
5. Notices. All notices, requests, demands and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed to be
duly given when received by hand delivery, by facsimile (when confirmed by
return facsimile) followed by first-class mail, by nationally recognized
overnight courier service or by prepaid registered or certified mail, return
receipt requested to the addresses set forth below:
If to the Company:
Xxxxxx Motorcycle Company, Ltd.
c/o Coates International, Ltd.
0000 Xxxxxxx #00 & Ridgewood Road
Wall Township, New Jersey 07719
Attention: Xxxxxx X. Xxxxxx, Chief Executive Officer
If to the Placement Agent:
Xxxxx Xxxxxxx & Co., Inc.
00 Xxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
Xx. Xxxxxxx Xxxxxxxxx
If to the Escrow Agent:
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HSBC Bank USA
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Issuer Services
6. General
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York applicable to agreements made
and to be entirely performed within such State.
(b) This Agreement, together with the Exhibits and Schedules annexed
hereto, sets forth the entire agreement and understanding of the parties in
respect to the matters contained herein and supersedes all prior agreements,
arrangements and understandings relating thereto
(c) All of the terms and conditions of this Agreement shall be binding
upon, and inure to the benefits of and be enforceable by, the parties hereto.
(d) This Agreement may be amended, modified, superseded or canceled, and
any of the terms or conditions hereof may be waived, only by a written
instrument executed by each party hereto or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver of any party of any condition, or
of the breach of any term contained in this Agreement, whether by conduct or
otherwise, in any one or more instance shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement. No party
may assign any rights, duties or obligations hereunder unless all other parties
have given their prior written consent.
(e) Of any provision included in this Agreement shall be determined by a
court of competent jurisdiction to be invalid or unenforceable, it shall not
affect the validity of the remaining provisions.
(f) This Agreement may be executed in several counterparts or by
separate instruments and all of such counterparts and instruments shall
constitute one agreement, binding on all of the parties hereto.
7. Fees. At the time the Escrow Account is opened, the Company shall pay the
Escrow Agent the fees stated in Exhibit B, attached hereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first set forth above.
XXXXXX MOTORCYCLE COMPANY, LTD.
By:
---------------------------------------------
Xxxxxx X. Xxxxxx
Chief Executive Officer
UNDERWRITER:
XXXXX XXXXXXX & CO., INC.
By:
---------------------------------------------
Name:
Title:
HSBC BANK USA, as Escrow Agent
By:
---------------------------------------------
Name:
Title:
Exhibit A
________ __, 200_
HSBC BANK USA
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Issuer Services
Dear Sirs:
In accordance with the terms of Section 2(b) of that certain Escrow
Agreement dated ______________ , 200_ by and among . (the
"Company"),____________ (the "Placement Agent") and HSBC Bank, USA (the "Escrow
Agent"), the Company and the Placement Agent hereby notify the Escrow Agent that
the Final Termination Date shall be ___________ __, 200_.
XXXXXX MOTORCYCLE COMPANY, LTD.
By:
---------------------------------------------
Xxxxxx X. Xxxxxx
Chief Executive Officer
XXXXX XXXXXXX & CO., INC.
By:
---------------------------------------------
Name:
Title:
Schedule A
The Escrow Agent is authorized to accept instructions signed or believed by the
Escrow Agent to be signed by the following on behalf of XXXXXX MOTORCYCLE
COMPANY, LTD.
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Xxxxxx X. Xxxxxx True Signature
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Name True Signature
The Escrow Agent is authorized to accept instructions signed or believed by the
Escrow Agent to be signed by the following on behalf of XXXXX XXXXXXX & CO.,
INC.
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Name True Signature
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Name True Signature
Exhibit B
Fees:
