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EXHIBIT 10.1
ESCROW AGREEMENT
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ESCROW AGREEMENT
ESCROW AGREEMENT, made and entered into as of the day of ,
2001, by and among Grafton State Bank, a Wisconsin banking corporation ("Escrow
Agent"), Harp & Eagle, Ltd, a Wisconsin corporation ("Company"), and J.E. Liss &
Company, Inc., a Wisconsin corporation registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended ("Managing Placement Agent").
WITNESSETH:
WHEREAS, the Company proposes to offer, offer for sale and sell to the
public up to 1,000,000 shares of its common stock, par value $0.0001 per share
("Common Stock"), at an initial offering price of $ per share ("Offering");
WHEREAS, a registration statement on Form SB-2 with respect to the
Common Stock, including a form of prospectus, has been filed by the Company with
the Securities and Exchange Commission ("Commission") under the Securities Act
of 1933, as amended ("Securities Act"). One or more amendments to or changes in
such registration statement have been or may be so filed, and a final form of
prospectus will be filed with the Commission upon the effectiveness of such
registration statement. Such registration statement (including all exhibits
thereto), as amended at the time it becomes effective and at the time each
post-effective amendment thereto becomes effective, and the final prospectus
filed upon the effectiveness of such registration statement or post-effective
amendment (including any supplements to such final prospectus filed following
such effectiveness) are referred to herein, respectively, as the "Registration
Statement" and the "Prospectus";
WHEREAS, the Managing Placement Agent and such other member firms of
the National Association of Securities Dealers, Inc. ("NASD") as may be
designated by the Managing Placement Agent, in its discretion, to participate in
the distribution of the Common Stock (the Managing Placement Agent and such
additional broker- dealers, if any, being hereinafter collectively referred to
as the "Selected Placement Agents") are entitled to receive selling commissions
and expense allowances in connection with the distribution of the Common Stock,
as set forth in a certain selling agreement between the Managing Placement Agent
and the Company, dated July 24, 2000 ("Managing Placement Agent Agreement");
WHEREAS, the Managing Placement Agent Agreement, the Registration
Statement and the Prospectus provide that amounts tendered by investors in
payment of the subscription price for Common Stock, including checks, cash and
cash equivalents ("Subscription Proceeds"), shall be deposited and held in
escrow in a segregated account until such Subscription Proceeds are disbursed by
the Escrow Agent pursuant to this Agreement; and
WHEREAS, unless subscriptions for not less than 60,000 shares of Common
Stock are accepted by the Company and fully paid for on or before the
Termination Date, the Offering will terminate, and no Common Stock will be sold.
"Termination Date" means the date which is 120 days after the date upon which
the Registration Statement first becomes effective under the Securities Act
(which effective date shall also be the date of the Prospectus).
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Escrow. From the date hereof through and including (i) the date of
the final disbursement of funds pursuant to this Agreement or (ii) termination
of the Offering pursuant to Section 12 of the Managing Placement Agent
Agreement, whichever later occurs, the Escrow Agent shall act as escrow agent
and shall receive and disburse all Subscription Proceeds and earnings, if any,
thereon in accordance with the terms of this Agreement. The Escrow Agent hereby
represents to the Company and to each Selected Placement Agent that it is a
"bank" as such term is defined by Section 3(a)(6) of the Securities Exchange Act
of 1934, as amended ("Exchange Act").
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2. Deposit Procedure.
(a) The Escrow Agent shall establish an appropriate segregated account
("Escrow Account") designated as the "Harp & Eagle, Ltd. Escrow Account," or
with such other appropriate designation as shall be assigned by the Escrow Agent
and communicated to the Company and the Managing Placement Agent. The Escrow
Agent shall cause all Subscription Proceeds transmitted to it by the Selected
Placement Agents to be held in the Escrow Account. All checks received by the
Escrow Agent are to be held uncashed until required to be submitted for
collection pursuant to paragraph 2(b) of this Agreement.
(b) All Subscription Proceeds received by the Selected Placement Agents
shall be delivered to the Escrow Agent, at 101 Falls Road, Grafton, Wisconsin
53024, by 12:00, noon, on the business day following receipt thereof by a
Selected Placement Agent, together with a schedule of such payments and the
subscriptions represented thereby. Provided that the Escrow Agent shall have
received with respect to each subscription for Common Stock (i) Facsimile Notice
(as defined herein) from the Company that a subscription has been received by
the Company and (ii) Subscription Proceeds in the amount required to pay in full
for such subscription, delivered by a Selected Placement Agent as aforesaid, the
Escrow Agent shall immediately commence the collection process (as applicable)
with respect to such Subscription Proceeds. Any payment item which is returned
to the Escrow Agent on its initial presentation for payment need not again be
presented for collection. The Facsimile Notice provided for in this paragraph
shall be given by the Company not more than five (5) days following receipt by
the Escrow Agent of such Subscription Proceeds and not less than two (2)
business days prior to any disbursement of Subscription Proceeds by the Escrow
Agent pursuant to this Agreement.
(c) If a subscription is not accepted by the Company, the Company
shall, within five (5) days following its receipt from a Selected Placement
Agent of such subscription, provide the Escrow Agent with Facsimile Notice (as
defined herein) of the name of the rejected subscriber, the address of the
rejected subscriber, and the amount of Subscription Proceeds received from such
rejected subscriber and delivered to the Escrow Agent by a Selected Placement
Agent, as reported to the Company pursuant to the Managing Placement Agent
Agreement.
(d) If the Escrow Agent is holding collected funds with respect to a
rejected subscription, the Escrow Agent shall promptly remit the full amount of
Subscription Proceeds received by a Selected Placement Agent and delivered to
the Escrow Agent, without interest thereon or deduction therefrom, to the
rejected subscriber at the address provided by the Company. If the Escrow Agent
has presented the Subscription Proceeds of a rejected subscriber for collection
but has not yet collected funds, the Escrow Agent shall, promptly upon
collection of such funds, remit the full amount of Subscription Proceeds
received by a Selected Placement Agent and delivered to the Escrow Agent,
without interest thereon or deduction therefrom, to the rejected subscriber at
the address provided by the Company. If the Escrow Agent has not yet presented
the Subscription Proceeds of a rejected subscriber for collection, the Escrow
Agent shall promptly return in full the Subscription Proceeds received by a
Selected Placement Agent and delivered to the Escrow Agent in the form so
received and delivered, without interest thereon or deduction therefrom, to the
rejected subscriber at the address provided by the Company.
3. Investment of Escrow Funds. The Escrow Agent shall invest all
funds held in the Escrow Account (including earnings, if any, thereon) in United
States government securities or securities guaranteed by the United States,
certificates of deposit of banks located in the United States or any other
investment, provided, in each case, that such investment is permitted by Rule
15c2-4, promulgated by the Securities and Exchange Commission under the Exchange
Act ("Rule 15c2-4"), and NASD Notice to Members 84-7. Such investments shall be
made in a manner consistent with the requirement that the Subscription Proceeds
be available for delivery by the Escrow Agent at the times described herein. The
parties hereto recognize that there may be a forfeiture of interest in the event
of early withdrawal from an interest-bearing account of investment.
4. Initial Closing.
(a) If the Escrow Agent shall (i) be holding in escrow collected funds
representing Subscription Proceeds in an amount equal to the full purchase price
of 60,000 shares of Common Stock and (ii) have received from the Company and the
Managing Placement Agent, on or before the Termination Date and the Initial
Closing Date, respectively, the Facsimile Notice (as defined herein) and related
Confirmation (as defined herein) described in
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paragraph 4(b) hereof, then the Escrow Agent shall disburse the collected funds
then held in the Escrow Account (less fees of the Escrow Agent as provided
herein) to the Company and to the Managing Placement Agent, as provided herein
and subject to the provisions hereof, at the Initial Closing. As used in this
Agreement, the terms "Initial Closing" and "Initial Closing Date" shall have the
meanings ascribed to such terms in Section 4(g) of the Managing Placement Agent
Agreement; the Initial Closing shall be scheduled as provided therein.
(b) On or before the Termination Date, the Escrow Agent shall have
received Facsimile Notice (as defined herein) from the Company and the Managing
Placement Agent that all conditions precedent to the disbursement of
Subscription Proceeds on the Initial Closing Date (including without limitation
all of the conditions set forth in Section 9 of the Managing Placement Agent
Agreement) have been fully satisfied as required under the Prospectus, the
Managing Placement Agent Agreement, Rule 15c2-4 and/or NASD Notices to Members
84-64 and 84-7, specifically certifying that subscriptions for not less than
60,000 shares of Common Stock have been received and accepted by the Company on
or before the Termination Date; Confirmation (as defined herein) of such
Facsimile Notice shall be delivered to the Escrow Agent on or before the Initial
Closing Date, dated as of the Initial Closing Date.
(c) Provided that the Escrow Agent shall have (i) received and be
holding in escrow collected Subscription Proceeds as required under paragraph
4(a) hereof, (ii) received the Facsimile Notice (as defined herein) required
under paragraph 4(b) hereof on or before the Termination Date and (ii) received
Confirmation (as defined herein) of the Facsimile Notice required under
paragraph 4(b) hereof on or before the Initial Closing Date, the Escrow Agent
shall, on the Initial Closing Date, disburse the collected funds then held in
the Escrow Account as follows: First, to the Escrow Agent in the amount of any
fees then due and payable to such Agent (which shall not exceed on the Initial
Closing Date the aggregate earnings, if any, on funds held in the Escrow
Account, determined as of the business day immediately preceding such Closing
Date); Second, to the Managing Placement Agent in an amount equal to the
aggregate selling commissions and expense allowances then due and payable to the
Selected Placement Agents pursuant to the Managing Placement Agent Agreement;
and Third, to the Company in the amount of any balance then remaining in the
Escrow Account.
(d) If any of the conditions described in paragraphs 4(a) and 4(b)
hereof shall not have been fully satisfied at the close of business on the date
(Termination Date or Initial Closing Date) specified herein for such compliance,
the Escrow Agent shall promptly return all Subscription Proceeds directly to
subscribers, with interest thereon at its passbook rate for the period held in
escrow, and the escrow provided for herein shall thereupon terminate.
5. Additional Closings.
(a) Subsequent to the Initial Closing Date, the collected funds then
held in the Escrow Account shall be disbursed by the Escrow Agent from time to
time, as provided in Section 4(g) of the Managing Placement Agent Agreement, at
one or more Additional Closings. As used herein, the terms "Additional Closing"
and "Additional Closing Date" shall have the meanings ascribed to such terms in
Section 4(g) of the Managing Placement Agent Agreement; Additional Closings
shall be scheduled as provided in such Agreement; provided, however, that no
Additional Closing shall occur less than seven (7) days nor more than thirty
(30) days following the immediately preceding Closing.
(b) Prior to the disbursement of collected funds held in the Escrow
Account at any Additional Closing, the Escrow Agent shall have received
Facsimile Notice (as defined herein) from the Company and the Managing Placement
Agent that all conditions precedent to such disbursement by the Escrow Agent
(including without limitation all of the conditions set forth in Section 9 of
the Managing Placement Agent Agreement) have been fully satisfied as required
under the Prospectus, the Managing Placement Agent Agreement, Rule 15c2-4 and
NASD Notices to Members 84-64 and 84-7. The Facsimile Notice from the Company
and the Managing Placement Agent provided for in this paragraph 5(b) must be
received by the Escrow Agent not less than two (2) business days prior to such
Additional Closing Date; Confirmation (as defined herein) of such Facsimile
Notice shall be delivered to the Escrow Agent by the Company and the Managing
Placement Agent on or before such Additional Closing Date, dated as of such
Additional Closing Date.
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(c) Provided that the Facsimile Notice (as defined herein) required
under paragraph 5(b) hereof shall have been received by Escrow Agent not less
than two (2) business days prior to, and confirmed in writing on or before, each
Additional Closing Date, the Escrow Agent shall, on such Additional Closing
Date, disburse the collected funds then held in the Escrow Account as follows:
First, to the Escrow Agent in the amount of any fees then due and payable to
such Agent (which shall not exceed on any Additional Closing Date the aggregate
earnings, if any, on funds held in the Escrow Account, determined as of the
business day immediately preceding such Closing Date); Second, to the Managing
Placement Agent in an amount equal to the aggregate selling commissions and
expense allowances then due and payable to the Selected Placement Agents
pursuant to the Managing Placement Agent Agreement; and Third, to the Company in
the amount of any balance then remaining in the Escrow Account.
6. Books and Records. The Escrow Agent shall maintain accurate
records of all transactions hereunder. Promptly upon the termination of escrow,
or as may reasonably be requested by the Company or the Managing Placement Agent
prior thereto, the Escrow Agent shall provide the Company and the Managing
Placement Agent with a complete copy of such records, certified by the Escrow
Agent to be a complete and accurate account of all such transactions. The
authorized representatives of the Company and the Managing Placement Agent shall
also have access to such books and records at all reasonable times during normal
business hours upon reasonable notice to the Escrow Agent.
7. Escrow Agent Fees. As compensation for services performed by it
pursuant to this Agreement, the Escrow Agent shall be entitled to receive from
the Company the fees set forth on Schedule A hereto; such fees shall be deducted
from Escrow Income (as defined in such Schedule A), and the Company shall pay to
the Escrow Agent on demand any portion of such fees which remains unpaid
following the final Closing.
8. Termination. This Agreement shall terminate on the final
disposition of the moneys and property held in escrow under and pursuant to the
terms hereof, provided that the rights of the Escrow Agent and the obligations
of the Company under paragraphs 7 and 9 shall survive the termination hereof.
9. General Provisions.
(a) This Agreement expressly sets forth all the duties of the Escrow
Agent with respect to any and all matters pertinent hereto.
(b) The Escrow Agent shall not be liable, except for its own negligence
or willful misconduct and, except with respect to claims based upon such
negligence or willful misconduct that are successfully asserted against the
Escrow Agent. The Company shall indemnify and hold harmless the Escrow Agent
(and any successor Escrow Agent) from and against any and all losses,
liabilities, claims, actions, damages and expenses, including reasonable
attorneys' fees and disbursements, arising out of and in connection with this
Agreement.
(c) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that any person purporting
to give notice or advice, or to accept and acknowledge receipt, or to make any
statement or execute any documents in connection with the provisions of this
Agreement has been duly authorized to do so.
(d) In the event that the Escrow Agent (i) shall be uncertain as to its
duties arising under this Agreement or (ii) shall receive instructions from the
Company or the Managing Placement Agent as to the funds held in the Escrow
Account which, in its opinion, are inconsistent with each other or are in any
conflict with any of the provisions of this Agreement, the Escrow Agent shall be
authorized to hold any and all Subscription Proceeds received by it, together
with any other amounts which shall accrue to or be deposited in the Escrow
Account, pending the settlement of any such controversy by final adjudication of
a court of competent jurisdiction, or the Escrow Agent may, at its option,
deposit such funds with the clerk of a court of competent jurisdiction, in an
appropriate proceeding to which all parties in interest are duly joined.
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(e) The Escrow Agent (and any successor escrow agent) may at any time
resign as such by delivering all amounts held in the Escrow Account to any
successor escrow agent designated by the Company in writing, or to any court of
competent jurisdiction, whereupon the Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with this Agreement.
The resignation of the Escrow Agent will take effect (i) upon the appointment of
a successor (including a court of competent jurisdiction) or (ii) thirty (30)
days after the date of delivery of its written notice of resignation to the
Company and the Managing Placement Agent, whichever first occurs. If at such
time the Escrow Agent has not received a written designation of a successor
escrow agent, the Escrow Agent's sole responsibility thereafter shall be to
safekeep the funds held in the Escrow Account until receipt by the Escrow Agent
of a written designation by the Company of a successor escrow agent or a final
order of a court of competent jurisdiction.
(f) The parties hereto hereby irrevocably submit to the jurisdiction of
any Wisconsin state court or federal court sitting in Wisconsin in any action or
proceeding arising out of or relating to this Agreement, and the parties hereby
irrevocably agree that all claims in respect of such action or proceeding shall
be heard and determined in such state or federal court. The parties to this
Agreement hereby consent to and grant to any such court jurisdiction over the
persons of such parties and over the subject matter of any such dispute and
agree that delivery or mailing of any process, instrument or other paper in
connection with any such action or proceeding in the manner provided in this
Agreement, or in such other manner as may be permitted by law, shall be valid
and sufficient service of such process, instrument or other paper.
(g) This Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and their respective successors and assigns, and
shall not be enforceable by or inure to the benefit of any third party. Except
as provided herein with respect to a resignation by the Escrow Agent, no party
hereto may assign any of its rights or obligations under this Agreement without
the prior written consent of the other parties hereto.
(h) This Agreement may only be modified by a written instrument signed
by the parties hereto, and no waiver hereunder shall be effective unless in
writing signed by the party to be charged.
(i) The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectibility of any security or other document or
instrument held by or delivered to such Escrow Agent pursuant to the terms of
this Agreement.
(j) For purposes hereof, "Facsimile Notice" shall mean the delivery by
telephone facsimile (FAX) of a notice, request, demand or other communication
provided for herein, and "Confirmation" shall mean the delivery by hand (via
commercial courier service or otherwise) or by first class mail, if and to the
extent required hereunder, of a manually-signed (if applicable) counterpart of
any such notice, demand or other communication. All Facsimile Notices and
Confirmations shall be deemed given when received and shall be telecopied and
delivered by hand, respectively, to the parties at the facsimile (FAX) telephone
numbers and addresses listed below, or to such other persons or facsimile
telephone numbers/addresses as the relevant party shall designate from time to
time in writing delivered by hand as aforesaid:
If to the Company: Harp & Eagle, Ltd.
Attention: Cary James O'Dwanny
Facsimile Notice (FAX) Telephone Number: (414) 290-6300
Confirmation Address: 1234 North Astor Street
Milwaukee, Wisconsin 53202
If to the Escrow Agent: Grafton State Bank
Escrow Department
Attention: Dorothy Jochims
Facsimile Notice (FAX) Telephone Number: (414) 377-6328
Confirmation Address: 101 Falls Road
Grafton, Wisconsin 53024
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If to the Managing Placement Agent: J.E. Liss & Company, Inc.
Attention: Jerome E. Liss
Facsimile Notice (FAX) Telephone Number: (414) 225-3168
Confirmation Address: 424 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(k) This Agreement shall be construed in accordance with and governed
by the internal law of the State of Wisconsin.
(l) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the day and year first above written.
International Monetary Systems, Ltd.
By:
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Cary James O'Dwanny, President
J.E. Liss & Company, Inc.
By:
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Jerome E. Liss, President
Grafton State Bank
By:
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Thomas J. Sheehan, President
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ESCROW AGREEMENT
Schedule A
This Schedule A to the Escrow Agreement, dated as of , 2001,
by and among Grafton State Bank ("Escrow Agent"), International Monetary
Systems, Ltd. ("Company") and J.E. Liss & Company, Inc. ("Managing Placement
Agent"), sets forth the compensation arrangements referred to in paragraph 7 of
such Agreement, as follows:
For services performed by it pursuant to the Escrow Agreement, the
Escrow Agent shall be entitled to receive from the Company fees in the amounts
of $2,500, payable upon the execution hereof, plus $250 per Closing and $10 per
subscriber (whether accepted or rejected); provided, however, that the Escrow
Agent shall receive, in the aggregate, not less than $3,000 in consideration of
its services rendered pursuant to the terms of the Escrow Agreement. Except for
the initial payment due upon the execution of this Agreement, such fees shall be
(a) due and payable on the Initial Closing Date and each Additional Closing Date
until paid in full and (b) payable, through the final Closing, only from and to
the extent of available Escrow Income; provided that, if payments made from
available Escrow Income, made at the Initial Closing and one or more Additional
Closings are not, in the aggregate, sufficient to pay such fees in full, the
Company shall pay on demand any such fees which remain unpaid following the
final Closing. "Escrow Income" is the amount of interest and/or dividends, if
any, which shall have been (x) paid on or in respect of the Escrow Account
(representing earnings on funds held therein) and (y) deposited in such Account
as collected funds on or prior to the business day immediately preceding such
Initial Closing Date or Additional Closing Date, as the case may be. If and to
the extent that Escrow Income exceeds the aggregate fees payable to the Escrow
Agent hereunder, such excess shall be paid to the Company at the Initial Closing
or Additional Closing(s), as the case may be. The foregoing notwithstanding, if
the Offering is terminated prior to the Initial Closing, pursuant to the
provisions of Section 12 of the Managing Placement Agent Agreement or otherwise,
the Escrow Agent shall be entitled to receive fees in the aggregate amount of
$3,500, and no more, payable by the Company on demand. All terms used herein
shall have the same meanings ascribed to them in the Escrow Agreement of which
this Schedule is a part.