EIF Holdings, Inc. , (Oct. 01, 1996)INQUIRY LETTERCADES SCHUTTE FLEMING & WRIGHT 1000 BISHOP STREET HONOLULU, HAWAII 96813 TELEPHONE(808) 521-9200 September 23, 1996
Division of Corporate Finance Securities & Exchange Commission Washington, D.C. 20549
Sirs:
Our clients Messrs. Oshima and Wong are creditors ("Creditors") of Grant K. Kidani ("Kidani") as Trustee of The Kidani Trust (the "Trust"). For several months, Kidani served as a director and the president of EIF Holdings, Inc., a Hawaii corporation ("EIF"). Prior to the time Kidani served as a director and/or officer of EIF, the Trust, through Kidani as Trustee, acquired from EIF two million six hundred sixty thousand (2,660,000) shares of EIF common stock (the "Shares"). All contingencies relating to the acquisition of the Shares were satisfied on or before January 28, 1993 and the certificates for the Shares were dated and delivered to the Trust on February 2, 1993. For your reference, a copy of one of these certificates is attached hereto as Exhibit A. The Certificates for the Shares are restricted by a legend because the shares were not issued as part of a public placement. Under Rule 144, the Trust is considered an affiliate by virtue of its ownership of more than 10% of the issued and outstanding shares of EIF common stock. Kidani is not now, nor has he been since February 1995, nor does he anticipate becoming in the future an officer, director or other agent or employee of EIF. On June 26, 1992, the Creditors obtained a judgment against Kidani in the Circuit Court of the First Circuit of the State of Hawaii (the "Court"). On September 6, 1994, the Creditors moved the Court to order Kidani to turnover the Shares, for a writ of execution for the sale of the Shares, and to direct payment of the funds to the Creditors to realize the approximately $600,000.00 still owing on the judgment (the "Motion"). By order dated November 4, 1994, and file-stamped November 14, 1994 (the "Order"), the Court granted the Motion transferring the beneficial interest in the Shares to the Creditors and, thus, ordering Kidani to transfer the Shares to the Creditors. Pursuant to the Order, Kidani turned over the certificates for the Shares to the Creditors. The Creditors desire to realize the monies owed to them, which now amount to over $900,000.00 by selling the Shares they hold via the Order. EIF and its transfer agent are unsure as to who "owns" the shares and whether a "transfer" occurred as a result of the Order. Section (d)(1) of Rule 144 provides: A minimum of two years must elapse between the later of the date of the acquisition of the securities from the issuer or from an affiliate of the issuer, and any resale of such securities in reliance on this section for the account of either the acquiror or any subsequent holder of those securities, and if the acquiror takes the securities by purchase, the two-year period shall not begin until the full purchase price or other consideration is paid or given by the person acquiring the securities from the issuer or from an affiliate of the issuer. Based on the foregoing facts and circumstances, we are hereby requesting, on behalf of the Creditors, an interpretation by your office as to the effect of the Order on the holding period for the Creditors with respect to Rule 144. Specifically, whether the Creditors will have completed the two-year holding period on November 4 (or 14), 1996, two years after the entry of the Hawaii Courts order mandating the transfer of the Shares to the Creditors (provided, of course, that all other requirements of Rule 144 besides the two-year holding period are satisfied). Thank you for your attention to this matter and we look forward to your reply. Should you have any questions or require further information, please do not hesitate to contact the undersigned at (808) 521-9249. Very truly yours, CADES SCHUTTE FLEMING & WRIGHT By Marc E. Rousseau cc: William J. Wynhoff, Esq.
October 1, 1996 RESPONSE OF THE OFFICE OF CHIEF COUNSEL DIVISION OF CORPORATION FINANCE
Incoming letter dated September 23, 1996 Based on the facts presented, it is the view of the Division that the holding period of Leighton K. Oshima and Sidney J. Y. Wong for their restricted shares of EIF Holdings, Inc., began on November 4, 1994, the date Grant K. Kidani, who was then an affiliate of the issuer, was ordered to surrender and transfer such shares to Messrs. Oshima and Wong toward satisfaction of a judgment in their favor. Because this position is based on the representations made to the Division in your letter, you should note that different facts or conditions might require a different result. Sincerely, Michael Hyatte Special Counsel |
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